* Yen gains as investors pare back risk exposure
* Bank of America deemed to need $34 bln more capital-source
* Markets wary before US stress tests, ECB and BoE meetings
* Euro dips vs dlr as caution outweighs firmer EZ PMI data
(Updates prices, adds quotes)
By Jessica Mortimer
LONDON, May 6 (Reuters) - The yen gained broadly on Wednesday, while the dollar edged up versus the euro, as nervousness ahead of U.S. stress test results on banks encouraged investors to pare back exposure to risk.
Concerns about these results, which are due on Thursday, were heightened after a source familiar with the tests said Bank of America required as much as $34 billion in additional capital.
This prompted investors to buy back the yen and the dollar -- which typically gain in times of heightened risk aversion -- after recent optimism that the global economy may be over the worst had led them to take on more risk.
The single currency pared some losses after a better-than-expected survey on the euro zone services sector, but wariness about event risks this week kept it in negative territory against both the U.S. and Japanese currencies.
As well as the stress tests, markets were cautious ahead of Thursday's policy decisions by the European Central Bank and the Bank of England and key U.S. jobs data on Friday.
Later on Wednesday, investors will be watching out for U.S. ADP unemployment data, which could provide some clues on how bad the state of the U.S. jobs market is.
"There is still some bullish news around and there have been some bright sparks recently, but people are wary that there could be things waiting around the corner to trip things up," CMC Markets analyst James Hughes said.
"The stress test results will be key as there is still a lot of underlying nervousness surrounding the banking sector," he added.
At 1025 GMT, the euro fell 0.6 percent against the yen to 130.86 yen, while the dollar lost 0.6 percent to 98.27 yen.
Against the dollar, the euro fell 0.1 percent on the day to $1.3312, well below the one-month high of $1.3439 touched on trading platform EBS on Tuesday.
BETTER DATA
Data continued to suggest that the global economy is showing tentative signs of recovery.
The euro zone purchasing managers' index for services was unexpectedly revised up to post its biggest one-month rise since December 2001, while the equivalent survey for the UK showed the slowest contraction in the sector in eight months. See and.
The better euro zone data and a warning from China's central bank that U.S. quantitative easing measures could cause the dollar to weaken briefly pushed the euro into positive territory against the dollar.
But it was soon pegged back, with investors remaining nervous ahead of Thursday's policy announcement by the European Central Bank (ECB), as well as one from the Bank of England (BoE).
The ECB is expected to cut interest rates to a record low of 1 percent, while the BoE is seen holding rates at 0.5 percent, also a record low, though the main focus will be on whether the ECB announces any additional unconventional policy measures..
Analysts noted, however, that beyond this week the mood is likely to remain buoyant and a rally in riskier assets could resume.
"Evidence of green shoots in the global economy is still present, with improvements in leading economic indicators and in key areas such as the U.S. housing market, and there are no signs that things will turn the other way," Stockholm-based SEB currency strategist Johan Javeus said. (Reporting by Jessica Mortimer; editing by Stephen Nisbet)