* Euro rises, broad selling momentum cools for now
* Focus on ECB meet, liquidity policy, possible bond buys
* U.S. to back European Financial Stability Fund
(Adds comment, U.S. data)
By Gertrude Chavez-Dreyfuss
NEW YORK, Dec 1 (Reuters) - The euro rebounded on Wednesday on hopes the European Central Bank may take bold steps to ease the region's debt crisis and on news the United States could back the effort through higher IMF commitments.
The single euro zone currency remained vulnerable given persistent fears about Europe's fiscal problems but the U.S. pledge on International Monetary Fund support pushed the euro to session highs at $1.3183.
Traders in general were happy to keep the euro within a tight range ahead of Thursday's ECB meeting.
The ECB is expected to keep interest rates unchanged and possibly announce the extension of crisis support measures beyond their expiration in mid-January.. Some analysts also expect the central bank to keep its three-month liquidity operations unlimited to help banks struggling for cash.
Still some market participants think the ECB could disappoint the market given the well-publicized conflict within the bank about buying bonds. That could prompt a resumption of the euro's sell-off in fairly short order, analysts said.
"I personally think the market will be disappointed tomorrow because the lack of a consensus within the ECB about bond purchases will cause it to deliver less than what the market is hoping for," said Aston Chan, portfolio manager at GLC, a $1.2 billion London-based global macro hedge fund.
Chan added that the euro zone crisis has morphed into a political problem given Germany's doubts about funding more bailouts. Germany is the euro zone's largest economy and its de facto lender of last resort.
In midday New York trading, the euro was up 1.3 percent at $1.3147, pulling away from Tuesday's 2-1/2-month low at $1.2969, but off the day's highs at $1.3183.
A slight narrowing of yield premiums of government debt in Portugal, Spain, and Italy over safe-haven German bonds also supported the euro, as did a rise in European stocks and a decline in the costs of periphery credit default swaps.
Relief that the Portuguese auction went well helped euro bulls counter offers at the $1.3090-$1.3100 area.
EURO -- A SELL ON RALLIES
Depending on what the ECB announces on Thursday, traders are still targeting $1.2794, a level representing the 61.8 percent retracement of the June to November rally. A breach of that should bring the August lows around $1.2600 in sight.
"Tomorrow is just one of many bridges that need crossing before we can properly value euro-zone assets, as such the euro ought to be sold on rallies," said Deutsche Bank in a note.
Analysts and traders said the euro's 9 percent fall from its Nov. 4 high of $1.4283 to Tuesday's low left many feeling it was a good time to take profits on short euros.
The euro's drop below $1.3080 meant it had already retraced 50 percent of its rise from the June low of $1.1876 to the November high in less than four weeks. Traders said there was support above $1.2950, where options barriers were reported.
GLC's Chan said his firm has placed the euro's fair market valuation in the low $1.20s. "Although the euro has come down a lot since that high in November, the peripheral widening of credit spreads have actually made the euro more expensive."
Overall though, concerns remain that other countries may follow Ireland and Greece in asking for bailouts, with Portugal widely seen as next in line, especially after ratings agency Standard & Poor's on Tuesday put its A- rating on review for downgrade.times of global expansions and increased risk-taking. The Australian dollar rose 0.7 percent to US$0.9645.
The greenback slipped 0.2 percent versus a currency basket to 80.998, but stayed near a 2 1/2-month high hit on Tuesday as the currency, the most liquid and therefore considered safe, has benefited from the euro's problems.
A bevy of positive U.S. data also added to upbeat sentiment on the dollar.
(Editing by Andrew Hay)