* Euro flops vs dollar, yen
* German ZEW sentiment beats f'cast; current conditions weak
* Risk demand still low, Japan growth contracts
(recasts, adds quotes, updates prices)
By Veronica Brown
LONDON, Dec 9 (Reuters) - The euro lost ground against the dollar and yen on Tuesday, beaten down as investor concern focused on economic sentiment in the single currency bloc's biggest economy.
The Mannheim-based ZEW economic think tank's poll of economic sentiment unexpectedly rose to -45.2 in December from -53.5 in November, but the current conditions component worsened, while it also saw Germany's economy slipping deeper into recession.
"It's not a particularly rosy picture for the euro zone right now," UBS senior currency strategist Geoff Kendrick said.
"Markets are very uncertain and unsure of which way to go."
Uniformly grim UK economic data also put the British pound under pressure, as economists pointed to further cuts in Bank of England interest rates.
Demand for risk was generally low after figures earlier on Tuesday showed the Japanese economy contracted 0.5 percent in July-September, far more than an initial reading of a 0.1 percent decrease.
Japanese technology company Sony Corp also announced major layoffs.
The euro fell 0.7 percent to $1.2845 by 1207 GMT, pulling back from $1.2968 hit on Monday, according to electronic trading platform EBS, its strongest level since late November.
Sterling fell 1 percent on the day to $1.4764, while the euro hovered near record highs reached the previous day against the UK unit.
The dollar traded 0.6 percent higher against a basket of currencies at 86.170, but it was slightly weaker at 92.70 yen.
Yen strength pushed the euro down 1.0 percent to 119.00 yen . The higher-yielding Australian and New Zealand dollars were down more than 1 percent against the low-yielding Japanese currency.
Sterling also dropped 1.1 percent against the yen as investors continued to unwind carry trades, where the yen was used to fund investments in higher-yielding currencies.
JAPAN SLIDE
Share prices rallied on Monday on a plan announced at the weekend by U.S. President-elect Barack Obama for massive infrastructure spending to boost the economy, and anticipation of a bailout plan for ailing U.S. automakers.
But weak Japanese growth data reinforced fears that the world's second-largest economy is facing its longest contraction ever, forcing Sony, one of the nation's biggest electronics makers, to cut 5 percent of its workforce as part of its restructuring efforts.
"The harsh reality of global weakness is still coming through in markets," said Stephen Koukoulas, strategist at TD Securities in London.
Investors were also wary of taking on risk as they awaited a U.S. emergency loan package for its top three automakers, while figures late last week showed that the U.S. lost more than half a million jobs in November alone.
Rapidly deteriorating economies have prompted central banks to slash rates aggressively.
The Bank of Canada is expected to cut rates by 50 basis points from 2.25 percent later in the day, according to a Reuters poll, although some in the market are bracing the possibility of an every bigger cut.
(Reporting by Veronica Brown; Editing by Victoria Main)