FOREX-Euro dives against dlr on weak data, stocks

* Euro falls 1 pct vs dollar , hit by euro zone GDP

* EZ Q4 GDP unexpectedly revised to record low -1.6 pct q/q

* Dollar, yen gain as equity markets turn lower

* Aussie falls with higher risk FX; RBA cuts rates by 25 bps

(Updates prices, adds quotes)

By Jessica Mortimer

LONDON, April 7 (Reuters) - The euro fell by one percent against the dollar on Tuesday, dented by data showing a record contraction in the euro zone economy and as European stocks turned lower.

Figures showed euro zone gross domestic product fell by 1.6 percent in the fourth quarter, the deepest ever quarterly fall and more than the 1.5 percent decline reported previously. Economists polled by Reuters had not expected a revision. [ID:nL798677].

A 0.9 percent fall in European equities <.FTEU3> and a fall of over 1 percent in U.S. S&P 500 stock futures also weighed on sentiment, denting the euro and other currencies seen as higher risks, such as sterling and the Australian dollar.

The falls in equities boosted the dollar as investors looked to buy dollar-denominated assets seen as safer bets. The yen, which also tends to rise as markets become more risk averse, also recovered from steep falls in the previous session.

Last week's optimism after Group of 20 leaders clinched a deal to tackle the global crisis has faded somewhat, with attention turning back to concerns about the global banking sector and jitters ahead of the U.S. corporate earnings season.

Banking sector worries took a further knock as an unsourced report in The Times newspaper said the International Monetary Fund was set to warn that toxic debt racked up by banks and insurers could hit $4 trillion. [ID:nT186243].

"The euro is softer against the dollar and showing some short-term sensitivity to movements on stock markets," Standard Bank head of G10 currency research Steve Barrow said.

At 0952 GMT, the euro fell 1 percent against the dollar to $1.3273 , just a touch above an earlier session low of $1.3264, according to Reuters data.

On a trade-weighted basis, the dollar rose by 0.7 percent to 85.333 <.DXY>.

Against the yen, the euro fell 1.6 percent to 133.22 yen while the dollar lost 0.6 percent to 100.38 yen .

On sterling, investors took little comfort from UK data showing British manufacturing output fell by less than expected in February, with a 0.9 percent monthly drop still marking the 12th straight month of declines [ID:nONS004158].

RBA CUTS RATES

The Australian dollar fell by 0.4 percent against its U.S. counterpart to $0.7093 as the currency, which investors see as higher risk, was also dented by falls on equity markets.

It had begun the day in positive territory after the Australian central bank cut interest rates by 25 basis points to a record low 3.0 percent but said it saw scope for only modest easing further out. [ID:nSYD452265].

Analysts said they expect currencies' movements to be largely driven by developments in equity markets ahead of the long Easter weekend.

"It is rather quiet; data is meagre and FX markets are trading in the wake of stock markets, which is likely to continue going into the long weekend," Frankfurt-based Commerzbank currency strategist Antje Praefcke said.

The focus on stocks and investor risk sentiment meant the yen showed little reaction to the Bank of Japan announcing earlier Monday it was leaving interest rates at 0.1 percent.

The decision was widely expected, though the BoJ also unveiled further steps to ease credit strains, announcing it would start lending against a wider range of municipal debt to support regional banks [ID:nSP168810].

(Reporting by Jessica Mortimer; editing by Patrick Graham)