* Dollar rebounds modestly vs euro
* Dollar capped by caution over U.S. jobs data later in day
* Grim jobs figures expected after dismal ADP report
By Shinichi Saoshiro
TOKYO, Jan 9 (Reuters) - The dollar inched up against the euro and held steady against the yen on Friday, trimming its losses from the previous day, though it was capped by caution ahead of U.S. employment data that is expected to be bleak.
Concerns about the U.S. jobs market have taken centre-stage after an ADP survey this week pointed to steep job losses in the private sector, taking the wind out of the dollar's new year surge and nudging the greenback lower on Thursday.
Market participants said the dollar's decline was stopped for the time being on Friday as the markets tried anticipating to what extent downbeat U.S. employment figures had been priced in.
"The dollar is not expected to slide sharply until the actual employment figures can be gauged," said Hideaki Inoue, chief manager of forex trading at Mitsubishi UFJ Trust Bank.
"Japanese exporters would like to sell the dollar, but at a higher level against the yen," Inoue said.
The dollar was little changed from late U.S. trade the previous day at 91.25 yen. The dollar had hit a one-month high of 94.65 yen on Tuesday on trading platform EBS.
The focal point is on how currency investors respond to the U.S. payrolls numbers and how much they have already factored in a downbeat outcome.
"It remains to be seen whether bad employment numbers will actually lead to a broad dollar sell-off. The dismal ADP figures released earlier in the week are likely to cushion the blow of a poor reading," said Takahide Nagasaki, chief FX strategist at Daiwa Securities SMBC.
Following Wednesday's grim U.S. ADP report, which showed private-sector job cuts of 693,000, economists have revised downward their forecasts for U.S. nonfarm payrolls in December to show job losses of 550,000, from an original Reuters poll estimate of 500,000.
But even if the payrolls number falls within expectations, analysts said other aspects of U.S. employment conditions should not be overlooked, such as the unemployment rate.
Economists polled by Reuters expect the U.S. unemployment rate to rise to a 15-year high of 7.0 percent in December from 6.7 percent in November.
The euro fell 0.3 percent to $1.3661. The euro has whipsawed between $1.3964 and a three-week low of $1.3312 this week, according to EBS data.
The European single currency hit the three-week low on Tuesday, hurt by growing expectations that the European Central Bank may have to cut interest rates further to counter falling prices and help a struggling euro zone economy.
The euro has since bounced back but traders say it still looks shaky as the Bank of England's rate cut on Thursday likely added pressure on the ECB to follow suit at a policy meeting next week.
The markets expect the ECB to cut rates by 50 basis points from the current 2.5 percent at the Jan. 15 policy meeting..
"The euro has come under pressure this week as top ECB officials have raised expectations of lower rates. Eyes are now on Trichet as the president himself has so far refrained from talking about interest rate policy," said Nagasaki at Daiwa Securities SMBC.
ECB President Jean-Claude Trichet said on Thursday that keeping inflation expectations firmly anchored is always a priority for the central bank but declined to make any comments on the interest rate outlook.
The BoE on Thursday cut interest rates by 50 basis points to 1.5 percent, the lowest since its inception in 1694.
Sterling bounced to three-week highs on Thursday against the dollar and euro after the rate cut as the reduction was in line with market expectations.
The pound slipped 0.2 percent to $1.5179 on Friday after hitting $1.5372 the previous day, according to Reuters data.
The euro was little changed against sterling at 89.95 pence. It went below 89.00 pence to hit its lowest level since mid-December the previous day. (Editing by Chris Gallagher)