* Euro hits day's low vs dollar on EU's Almunia comments
* Almunia: Eurogroup to discuss strong euro ahead of G7 meet
* Analysts see range trade before U.S. jobless claims, ISM
(Updates with Trichet comment, quotes, changes byline)
By Emelia Sithole-Matarise
LONDON, Oct 1 (Reuters) - The euro fell on Thursday, dragged down versus the dollar after a top European Union official said euro zone finance ministers would discuss the currency's appreciation before a Group of Seven meeting on Saturday.
The dollar gained broadly as waning risk appetite ahead of key U.S. data prompted investors to seek the relative safety of the greenback.
The euro fell more than half a percent to the day's low against the dollar after the EU's Economic and Monetary Affairs Commissioner Joaquin Almunia said euro strength would be discussed when officials meet in Istanbul at the weekend [ID:nWEA3160].
His comments followed statements from finance officials around the world in the past week on their discomfort with their currencies' strength against the dollar, which has tumbled around 10 percent against a currency basket in the past six months.
"What we are seeing now is a little bit of a correction taking place given some of the recent strong gains. This has been triggered by the talk in Europe this morning from both EU and ECB (European Central Bank) officials discussing the currency," said Ian Stannard, senior currency strategist at BNP Paribas in London.
"It does raise speculation that maybe currencies will be talked about in more detail at the upcoming G7 meeting so ahead of the meeting we could see the euro pull back," he said.
ECB President Jean-Claude Trichet said on Thursday that excess foreign exchange moves had an adverse impact. On Monday he backed the argument for a strong U.S. currency.
G7 finance ministers and central bank governors will meet on Saturday on the sidelines of World Bank and International Monetary Fund meetings to discuss recent financial market developments. [ID:nLU277715]
Canada's finance minister on Wednesday said the G7 would try to advance the resolution of global economic imbalances, including currency issues, and traders said dollar-related comments or news may be a trigger for investors to cover short positions accumulated recently.
By 1127 GMT, the euro was down 0.7 percent at the day's low around $1.4530.
The single European currency was also weighed down by data showing weaker than expected German retail sales but was little moved by European purchasing management indices. They held ground or moved closer to recovery in September, although the possibility of a double-dip slowdown remained. [ID:nL1494081]
The dollar
Traders brushed off Japan's quarterly tankan report, which showed business morale improved further as the economy picked up from its worst slump in decades, though it was still negative [JPBCLG=ECI].
The dollar index, which tracks the performance of the U.S. currency against a basket of six major currencies, was up 0.6 percent on the day at 77.134 <.DXY>.
MORE FX RHETORIC
Financial officials and policymakers in past weeks have cranked up their rhetoric regarding currencies -- particularly broad dollar weakness.
Japan's finance minister indicated this week government was not fazed by the yen's rally to an eight-month high against the dollar, only to later tone down his remarks.
Sterling weakened in recent days after Bank of England Governor Mervyn King highlighted the positive economic impact of a weak currency.
Some analysts said that while such statements were likely to increase in the future, their impact on the market may be limited if officials were not seen backing up their words with action to intervene.
So far, the Swiss National Bank is one of few major central banks seen acting in the market -- to stem the Swiss franc's appreciation. Some in the market said the SNB had a hand in pushing up the euro against the Swiss currency on Wednesday.
Traders awaited the U.S. Institute for Supply Management's manufacturing index for September due at 1400 GMT, as well as weekly U.S. jobless claims and testimony from Federal Reserve Chairman Ben Bernanke later in the day.
The dollar fell on Wednesday after data that increased expectations the U.S. economy was recovering.
(Additional reporting by Naomi Tajitsu, editing by Nigel Stephenson)