* Dollar slips vs euro, losing some of previous day's gains
* Traders say market quiet before U.S. Thanksgiving holiday
* Major currencies little moved after Mumbai attacks
By Satomi Noguchi
TOKYO, Nov 27 (Reuters) - The dollar fell against the euro on Thursday, reversing some of the previous day's gains on a string of weak U.S. economic reports that renewed worries about a deepening economic recession and revived safe-haven flows into the greenback.
The dollar's gains were capped after a slew of U.S. plans to shore up the economy amid the widening financial crisis raised concerns about the health of the nation's balance sheet, and prompted some players to question whether the dollar can keep its strength in the medium term, analysts said.
Trading overall stayed subdued in Asia as many investors sat on the sidelines with U.S. markets closed for the Thanksgiving holiday, but thin market liquidity could also cause choppy price movements, traders said.
"The market is trying to find out whether the dollar will shift to a falling trend or not, after seeing it gain on the theme of risk aversion," said Kengo Suzuki, a currency strategist at Shinko Securities.
The dollar had been lifted by demand from banks for dollar funding, as well as portfolio managers and hedge funds dumping assets and boosting cash holdings as they face investor redemptions.
But such moves may have subsided, and easing risk aversion from a rise in Wall Street shares and Asian stock markets could decrease the dollar's ability to keep the sharp gains it has made since the summer, traders said.
"Considering the series of U.S. economic measures, concerns over the nation's budget and the dollar's credibility may emerge as a market theme," said Yousuke Hosokawa, treasury department manager at Chuo Mitsui Trust and Banking.
"But at the same time, there is a certain demand for the dollar because of U.S. corporations' earnings season. So it will probably take a little bit longer to see the dollar's trend," he said.
The dollar may be dented by its falling yields, with U.S. 10-year Treasuries dropping to a fresh five-decade low below 3.0 percent on Wednesday. Meiji Yasuda Life Insurance, Japan's No.3 life insurer, said it would be moving some money out of U.S. Treasuries because of their falling yields.
"Given the market is in a corrective phase, the euro may rise as high as $1.35 in the next few weeks, though an expected interest rate cut by the European Central Bank may make the euro's rebound choppy," said Hideaki Inoue, chief manager of forex trading at Mitsubishi UFJ Trust.
The euro remained vulnerable versus the dollar and the yen after the ECB cemented expectations for another interest rate cut next week as inflation in Germany, the euro zone's biggest economy, tumbled this month.
The ECB will hold a policy meeting on Dec. 4 and analysts polled by Reuters expect another 50 basis point cut, which would take interest rates to 2.75 percent, the lowest in more than two years.
The euro rose 0.3 percent to $1.2923, after falling as low as $1.2819 during the previous session partly on pessimistic views about the impact of a 200 billion euro ($258.4 billion) European stimulus plan to cope with the financial crisis.
The euro had rebounded above $1.30 earlier this week, recovering from a 2-1/2-year low of $1.2329 hit in late October.
Major currencies were little moved by a series of attacks in India's financial capital Mumbai which killed at least 80 people, traders said. Indian stock markets will remain closed on Thursday, a spokesman for India's capital markets regulator said.
The euro dropped 0.4 percent against the yen from late U.S. trade on Wednesday to 122.76 yen.
The dollar fell 0.7 percent to 95.01 yen, having rebounded from Wednesday's low of 94.60 yen hit after a batch of dismal U.S. reports prompted investors to seek the safety of the low-yielding yen. Data on Wednesday showed U.S. consumer spending in October posted its biggest drop in more than seven years, and consumer confidence fell to a 28-year low in November, further darkening the outlook for the economy ahead of the year-end shopping season. ($1=.7739 euros) (Additional reporting by Kaori Kaneko; editing by Sophie Hardach)