* Dollar steady vs euro as market awaits G20, ECB meeting
* Trading subdued as new quarter gets underway
* Euro zone unemployment 8.5 percent; Weak Tankan dents yen
* Stronger-than-expected UK PMI data lifts sterling (Adds quote; updates prices; changes byline)
By Jessica Mortimer
LONDON, April 1 (Reuters) - The dollar was steady against the euro on Wednesday as caution before a summit of Group of 20 leaders in London and a European Central Bank interest rate decision on Thursday kept trading subdued.
Traders also noted thin trading volumes on the first day of a new quarter, although falls in equity prices kept investors wary, with European shares down 0.5 percent.
Investors were anxiously waiting to see whether G20 leaders can agree on any effective coordinated measures to ward off a prolonged global economic slump.
The U.S. currency had gained earlier in the global session after Bloomberg reported U.S. President Barack Obama had determined that a prepackaged bankruptcy was the best way forward for General Motors Corp.
It pared those gains, however, after a senior U.S. administration official said the report was "not accurate" and that Obama's thinking on the crisis facing GM has not changed since Monday.
"There was a downside case for euro/dollar due to the U.S. automaker concerns, but other than that there has been little of particular interest to drive currencies," SEB currency analyst in Stockholm Dag Muller said. "Volumes are subdued on the first day of the month."
He added that markets will be looking ahead to the release of U.S. ISM survey on manufacturing activity at 1400 GMT for further direction.
At 1112 GMT, the euro was steady against the dollar at $1.3254. The dollar index, a gauge of the greenback's performance against six major currencies, was also little changed at 85.526.
The yen was lower, however, as a record low reading in the Bank of Japan's Tankan survey of confidence among the country's big manufacturers sparked renewed worries about a deep recession in the country..
The dollar rose 0.1 percent to 98.90 yen, having earlier hit its highest level since March 5 of 99.45 yen, while the euro also gained 0.1 percent to 131.10 yen.
ECB, G20 EYED
Data on Wednesday showed unemployment in the euro zone jumped more than expected in February to 8.5 percent, underlining the speed of economic deterioration a day before the European Central Bank holds a policy-setting meeting.
The ECB is widely expected to cut key interest rates by 50 basis points to a record low 1.0 percent, but focus is on discussion of unconventional measures.
"The data highlights the weakness in the economy, suggests the ECB continues to cut rates ... and further extension of liquidity supplied to banks," said Juergen Michels, economist at Citigroup.
Attention is focused on any developments at the G20 as Obama, speaking on the eve of the summit, denied rifts between the world's leading economies and urged them to seek a consensus on joint action.
"Clearly the G20 meeting is plastered across the headlines and although some suggest this won't solve the current financial problems, it's going to be the posturing and detail that stands to influence specific currencies here," CMC Markets said in a note.
Among other currencies, sterling gained 0.4 percent against the dollar to $1.4388 after data showing the rate of decline in Britain's manufacturing sector eased much more than expected last month.
The CIPS/MARKIT manufacturing purchasing managers' index improved to 39.1 in March from 34.9 in February, well above analysts forecasts for a more modest rise to 35.0..
(Reporting by Jessica Mortimer; additional reporting by Tamawa Desai in London; editing by David Stamp)