* Euro trims losses after stocks momentarily turn positive
* Yen slips, stocks move quells some risk aversion
* Markets await U.S. data due later in the day
(Reledes, adds comment, updates throughout)
By Naomi Tajitsu
LONDON, April 15 (Reuters) - The euro inched up on Wednesday, cutting early losses as a recovery in European share prices prompted some traders to pick up currencies considered to be higher risk.
Some in the market added that the euro was drawing some support after European Central Bank Governing Council member Axel Weber on Wednesday said he was critical of cutting the central bank's official rate below 1 percent.
European shares poked into positive territory after spending much of the morning session in the red, and market participants said that traders were taking the move as a cue to sell the dollar -- often considered a safe bet in times of market uncertainty.
"It only takes a slight improvement in stocks to increase risk preference and for currencies like sterling and the euro to do better," said Neil Jones, head of European hedge fund sales at Mizuho Corporate Bank in London.
"It's really just market positioning."
In a speech, Weber said that the ECB's refinancing rate had room to fall -- and the central bank should use the rate as a tool to help the economy -- while warning that a rate under 1 percent could cause problems.
The ECB's refinancing rate is at 1.25 percent at the moment, following a string of cuts to help the euro zone economy weather broad weakness at home and abroad.
More cuts to that rate would further deteriorate what remains of the euro's yield advantage against the dollar and the yen, a process which has kept the euro under broad downward pressure in past months.
The euro was little changed at $1.3250 by 0940 GMT, pulling back from a session low of $1.3204 in earlier trade. Against the yen, it was up 0.2 percent at 131.25 yen, having earlier slumped as low as 129.95 yen.
A momentary move in European shares into positive territory had lifted the single European currency from the day's low. In late morning trade, stocks were down 0.3 percent.
Despite the fleeting pop higher, stock prices remained on the back foot as weak U.S. retail sales figures released on Tuesday had tempered optimism the global economic downturn may have hit a trough.
Sterling traded 0.2 percent higher at $1.4935 after the turnaround in stock prices had pushed the UK currency to a two-month high of $1.4975. The dollar inched up 0.2 percent to 99.05 yen, as the Japanese currency slipped across the board due to the slight thaw in risk aversion.
U.S. DATA AHEAD
Analysts were cautious about market movements, with some arguing that it was too early to get too hopeful that the global economic downturn was coming to an end.
They added that market participants were awaiting first-quarter earnings reports from U.S. financial giants JPMorgan Chase & Co. and Citigroup due later this week.
While strong results from Goldman Sachs earlier this week raised hopes U.S. banks are recuperating from the financial sector meltdown, evidence of ongoing weakness in other banks may be taken as a cue to keep selling risky assets.
An announcement by Swiss bank UBS on Wednesday that it made losses in the first quarter and would cut an additional 8,700 jobs underlined the continuing fragility of global financial institutions due to the global financial crisis.
Risk aversion had boosted the dollar and the yen in past sessions as both currencies are seen to be safer investment destinations than their UK and eurozone counterparts, as well as high-yielding currencies including the New Zealand and Australian dollars.
Market participants awaited a barrage of U.S. economic data later in the day, including readings of U.S. consumer prices, as well as the New York Federal Reserve's Empire State Survey and the U.S. central bank's Beige Book of regional economic conditions.
Also due on Wednesday are figures on U.S. earnings, capital flows, industrial production and the housing market. (Reporting by Naomi Tajitsu, editing by Toby Chopra)