* Dollar up vs euro, falls vs yen after ISM non-manuf data
* ADP, Challenger reports signal unease in labor markets
* Focus turning to ECB and BoE policy meetings (Adds comments, details)
By Vivianne Rodrigues
NEW YORK, Aug 5 (Reuters) - The dollar rose against the euro on Wednesday as reports showing greater-than-expected U.S. service sector contraction in July and surprisingly high job cuts by private employers boosted demand for the greenback as a safe-haven.
The advance contrasts with the dollar's sharp drop earlier in the week as upbeat U.S. and Chinese manufacturing data gave investors confidence to buy foreign currencies and riskier assets such as stocks.
However, Wednesday's lackluster reports signaled more uneasy times for the broader U.S. economy and renewed risk aversion, traders said.
Increased risk aversion tends to favor currencies such as the yen, a favored safe-haven, and the dollar versus higher-yielding counterparts.
"We're getting a mixed picture in this latest batch of data," said Joe Trevisani, a chief market analyst, at FX Solutions, in Ridgewood, New Jersey. "That's why we have seen the euro come off against the dollar."
In mid-morning trading in New York, the euro was 0.2 down
percent at $1.4371
The dollar was 0.3 percent lower versus the yen at 94.93
yen
The Institute for Supply Management said its non-manufacturing index fell to 46.4 in July from June's 47.0. A reading above 50 signals expansion. Economists expected a reading of 48.0. For details, see [ID:nWEN2057]
The ISM non-manufacturing report was much weaker than expected, contributing to a "risk-off kind of scenario" in the foreign exchange markets, favoring the dollar, said Andrew Busch, a global FX strategist at BMO Capital Markets in Chicago.
Another report showed new orders received by U.S. factories rose unexpectedly in June, advancing for a third straight month [ID:nN04135411].
The services sector and new orders figures followed reports showing larger-than-expected cuts by U.S. private employers in July and an increase in planned layoffs at U.S. firms. [ID:nWEN2040] [ID:nNYS005282]
The labor markets data "weighed on risk appetite and consequently revived some demand for safe-haven currencies," said Joe Manimbo, a currency trader at Travelex Global Business Payments in Washington.
Another gauge on the state of the U.S. labor markets is expected on Friday with the government's release of its monthly non-farm payrolls data.
Wednesday's ADP report "suggests that we could see a downside surprise to Friday's broader employment data," said Manimbo.
Investors' focus will also be on policy decisions by the Bank of England and European Central Bank due on Thursday. (Additional reporting by Wanfeng Zhou and Gertrude Chavez-Dreyfuss in New York; Editing by Dan Grebler)