* Higher-yielding currencies slip on shaky risk appetite
* Euro dips to session low on German ZEW, then recovers
* Sterling underperforms on expectations of more BoE QE
* Focus on U.S. data later in the session
(Adds details, updates prices)
By Emelia Sithole-Matarise
LONDON, Sept 15 (Reuters) - The dollar rose broadly against a basket of major currencies on Tuesday as European shares stumbled, cooling risk appetite and propping up demand for the safety of the greenback.
Sterling underperformed after Bank of England Governor Mervyn King said the central bank was looking at reducing the rate on commercial banks' reserves, fuelling speculation of further quantitative easing.
The dollar index, which measures the dollar's value against a basket of currencies, rose 0.1 percent to 76.81, staying above a one-year low of 76.457 hit last week. European equities fell 0.3 percent and U.S. stock futures slipped.
"The dollar is trading in its usual role as a safe haven asset," said Christian Lawrence, currency strategist at RBC Capital Markets in London.
"The European bourses are all lower, we are seeing S&P and Dow Jones stock futures pointing to a slight fall in U.S. equities. As a result we are seeing an appreciation of the dollar pretty much across the board."
The biggest moves were in cable, with sterling falling 0.5 percent on the day to $1.6484 by 1115 GMT after King's comments which fuelled speculation that the BoE may use yet another device in its quantitative easing toolkit.
The pound erased earlier gains made against the dollar after stronger than expected British house prices and a smaller-than-expected fall in inflation.
Sterling also hit a four-month low versus the euro on King's comments.
The euro fell to a session low against the dollar of $1.4579 after Germany's ZEW survey showed investor sentiment had risen less than expected in September.
The think tank's economic sentiment index rose to 57.7 from 56.1 in August, but below forecasts of 60.0. An index on current conditions improved to -74.0 from -77.2. Economists had forecast a reading of -68.0.
The euro was last at $1.4607, down 0.1 percent on the day.
Traders also cited options worth some 2 billion euros set to expire with a strike price of $1.4560.
Against the yen, the dollar rose 0.2 percent at 91.13 yen, pulling away from a seven-month low of 90.18 yen hit on trading platform EBS on Monday.
US RETAIL SALES KEY
Market players were waiting for U.S. retail sales data for August, expected to show a 2.0 percent rise after a 0.1 percent decline in July, and the New York Federal Reserve's "Empire State" September manufacturing figures due later.
"What will dictate where we go in terms of dollar/yen and potentially more broadly for the dollar is how the data pans out in the United States," said Derek Halpenny, European head of global currency research at Bank of Tokyo Mitsubishi-UFJ.
"We should have a clear picture in terms of Q3 GDP by the end of this week. That will potentially dictate movements in yields at the short end of the curve and potentially offer some support for the dollar," he said.
Meanwhile, the Australian dollar erased earlier losses after minutes of the Reserve Bank of Australia's last policy meeting gave little guidance to markets on when the cash rate would be raised from its record low of 3 percent.
The Australian dollar stood at $0.8591, down 0.3 percent on the day.
The dollar reversed earlier losses versus the Swiss franc to gain 0.2 percent to 1.0368 francs after industrial orders fell 17.5 percent in the second quarter compared with a 17.6 percent fall in the year-ago quarter.
A steady drop in Treasury yields in recent weeks surprised many and triggered speculation the U.S. dollar was fast becoming the preferred funding currency for carry trades. (Additional reporting by Tamawa Desai; editing by Elizabeth Piper)