* Sterling slides vs dollar, euro on UK Q3 GDP shock
* UK recession casts doubt over synchronised recovery
* Euro zone data, euro/sterling jump supports euro vs dollar
(Recasts, adds comment and quotes, updates prices)
By Jamie McGeever
LONDON, Oct 23 (Reuters) - Sterling fell sharply on Friday, giving broad support to both the dollar and the euro as markets were stunned by data that showed the British economy remained mired in recession in the third quarter.
News the British economy shrank 0.4 percent in the three months to September eclipsed a more positive set of euro zone economic data, and the euro and sterling striking respective 14-month and six-week highs against the dollar.
Sterling tumbled almost three cents against the dollar and the euro jumped more than one percent. This kept the dollar's trade-weighted index in positive territory, while the euro also drew support from the euro zone purchasing managers indices and the Ifo index of German business morale.
The UK data shock brought back the possibility the Bank of England will extend its quantitative easing programme next month. And coming after relatively dovish statements from the Swedish and Canadian central banks this week, it cast some doubt over the strength and synchronicity of the global recovery.
"There's no question a lot of people got wrong-footed on that one," said Paul Mackel, senior currency strategist at HSBC in London.
"It once again puts the focus back on the November rate decision and whether they'll expand QE. You have to ask if they'll seek extra insurance," he said of the BoE's Monetary Policy Committee.
At 0940 GMT sterling was down 1.4 percent on the day at $1.6395, falling from a six-week high of $1.6693 before the GDP data.
The euro was up 1.5 percent on the day at 91.75 pence, on track for its biggest one-day rally in six months.
This supported the euro's 0.1 percent gains on the dollar to $1.5040. In Asian trade, the euro took out option barriers at $1.5050 to a 14-month high of $1.5061.
The dollar index, a measure of its value against six major trading partner currencies, was up 0.2 percent on the day at 75.23.
EURO ZONE CHUGS ALONG
Earlier on Friday, euro zone purchasing managers indices and the Ifo index of German business morale showed the bloc's economic recovery to be generally on track.
It was something of a mixed bag, however, with the PMIs well above forecasts but the Ifo numbers not quite as robust as analysts had expected.
Economists at WestLB said in a note that the German economic recovery will continue in the coming months, but the global economy will be unable to regain its "dynamism" of recent years.
"As a result, our assessment that the coming year will only see a modest economic improvement remains unchanged," they said.
The dollar's trade-weighted gains were also supported by its rise against the yen, which was under broad selling pressure on the back of unfavourable U.S-Japanese yield spread moves and an accumulation of domestic factors.
The country's banking minister said Japan needed a second extra budget worth around 10 trillion yen and expectations grew that government debt would rise and a privatisation scheme be revised, pushing the dollar up to options barriers at 92 yen.
The dollar was last up 0.3 percent at 91.65 yen, having hit its highest in a month earlier in Asia at 91.92 yen.
The spread between 10-year U.S. and Japanese government bond yields widened to 210 basis points in favour of the dollar, making U.S. bonds more attractive to Japanese investors. Earlier this week that yield advantage was 196 basis points.
Later on Friday, Federal Reserve Chairman Ben Bernanke speaks. Traders are also digesting Chicago Fed President Charles Evan's remarks on Thursday that the Fed isn't particularly worried about inflation right now but is monitoring it closely.