* Uncertainty over fate of U.S. carmakers sway markets
* Euro zone unemployment 8.5 percent; PMI nudges up
* Markets keep eye on G20, ECB, U.S. jobs figures
* Dent to risk appetite sends Aussie, kiwi lower
(Adds quote; updates prices)
By Tamawa Desai
LONDON, April 1 (Reuters) - The dollar was supported on Wednesday as uncertainty over the fate of U.S. carmakers and falling share prices prompted investors to seek perceived safer assets and shun high yielders.
The euro backtracked from sharp gains the previous day, but was off lows as European share prices pared some losses after falling 1.0 percent in early trade.
By 1032 GMT, the euro was down 0.3 percent at $1.3199. Against the yen, the euro was down 0.3 percent at 130.60 yen.
The U.S. currency gained earlier in the global session after Bloomberg reported U.S. President Barack Obama has determined that a prepackaged bankruptcy is the best way forward for General Motors Corp, quoting people familiar with the matter.
But the dollar came off highs after a senior U.S. administration official said President Barack Obama's thinking on the crisis facing GM has not changed since Monday, saying the report was "not accurate".
The dollar index, a gauge of the greenback's performance against six major currencies, rose 0.3 percent to 85.771.
U.S. stock futures were 1.0 percent lower, after falling as much as 1.9 percent at one stage.
"With bankruptcy as a viable option for these carmakers, the news has helped sour risk sentiment," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi.
"The near-term impact will be negative," he added.
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 over 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.
Separate data showed the pace of decline in euro zone factory activity eased slightly in March. The Markit Eurozone Manufacturing purchasing managers' index rose to 33.9 for March from 33.5 in February. That was revised down from a flash reading of 34.0 and forecasts for an unchanged figure.
The dollar had earlier risen to 99.48 yen, the highest since March 5, after the Bank of Japan's tankan survey showed confidence among Japan's big manufacturers fell to a record low of minus 58, down 34 points from the previous survey and the largest drop on record.
The dollar was flat against the yen at 98.90 yen.
Reduced investor risk appetite sent higher-yielding currencies such as the Australian dollar lower, which was also dented by data showing Australian retail sales fell by the most in nine years, adding to the case for a cut in interest rates next week.
But influential central bank watcher and columnist Terry McCrann argued that the Reserve Bank of Australia would hold rates steady. McCrann gave no source for his belief but has been correct on enough RBA decisions to command market attention.
The New Zealand dollar extended a big slide after New Zealand's central bank warned on Wednesday that a recent rise in market interest rates was unwarranted and out of sync with its view of the economy. (Editing by Toby Chopra)