* Euro slightly up after hitting 1-month lows vs dlr, yen
* Euro up 0.2 percent at $1.2942, up 0.2 vs yen
* German ZEW survey eyed; expected to turn positive
* Sweden's central bank cuts 50 bps, says rates to stay low
(Releads, adds quotes, update prices, changes dateline prvs TOKYO)
By Tamawa Desai
LONDON, April 21 (Reuters) - The euro rose on Tuesday after hitting one-month lows against the dollar and yen as investors took profits, although nervousness about corporate earnings announcements and the health of banks kept gains in check.
The yen crosses and commodities currencies have taken the brunt of the impact from a steep slide in U.S. equities after Bank of America reported a jump in non-performing assets, underscoring the banking sector's troubles.
The Japanese currency hit its highest since mid-March against the euro and a three-week peak against the British pound as the bank sector concerns tempered risk appetite and triggered buying back of yen.
It later retreated after its gains cleared out near-term sell orders for its rivals, helping the euro, sterling and the Australian dollar to recover some ground against the dollar as well, but that is likely to prove short-lived, analysts say.
"The recent correction will likely continue and we may see euro and cable and Aussie dollar pull lower in the next couple of days," said Ian Stannard, senior foreign exchange strategist at BNP Paribas.
By 0753 GMT, the euro rose 0.2 percent against the dollar to $1.2947, but was not far from a one-month low of $1.2888 hit on trading platform EBS on Monday.
The euro was up 0.2 percent at 126.77 yen after hitting a low of 126.10 yen on EBS.
The dollar was flat at 97.94 yen, up from a three-week low of 97.66 yen hit on Monday.
Data on Tuesday is expected to show German investor sentiment rose into positive territory for the first time in roughly two years. The ZEW think tank's economic sentiment index is forecast to rise to 1.5 in March from -3.5 the previous month.
"It is doubtful whether data on Germany's ZEW index will really change the mood, although it should post a gain in the expectations component on the back of the growing equity market optimism prevailing at the time of the survey," said analysts at Calyon in a note.
The euro will likely remain under pressure, hurt by uncertainty over what policy steps the European Central Bank may adopt next month.
The market will also focus on banks as players await the outcome of stress tests by U.S. authorities to determine how well lenders would fare if the recession proved deeper and longer than expected. Results are expected on May 4.
Meanwhile, the Swedish crown rose to around 11.16 per euro from around 11.25 crowns after Sweden's Riksbank cut rates by a smaller-than-expected 50 basis points.
Sweden's central bank slashed its key interest rate to a record low 0.5 percent. The median consensus in a Reuters poll was for a 75 basis point reduction although an equal number of economists had forecast a 50 basis point cut.
The Riksbank said the repo rate was expected to remain at a low level until the beginning of 2011. It also said there was some probability of further cuts and of resorting to "other measures" should the economy deteriorate more than expected.
The Bank of Canada will also announce its rate decision later in the day.
The Australian dollar was earlier up 1 percent against the yen to 69.10 yen, after falling to 68.10 yen earlier in the day and having slid more than 4 percent on Monday.
The Australian dollar hit six-month highs of 73.49 yen and $0.7328 last week.
(Editing by Ruth Pitchford)