* Dollar up as central banks scale back emergency lending
* Euro retreats from 1-year high
* Sterling takes hit after BoE King's weak pound comments
* G20 meeting in Pittsburgh in focus (Recasts, updates prices, adds data, comment)
By Steven C. Johnson
NEW YORK, Sept 24 (Reuters) - The dollar rose against the euro after central banks said they would scale back some emergency lending programs in light of improved economic conditions, while sterling plunged on comments from Britain's central bank governor.
The move reversed earlier dollar weakness as traders said it sparked investors to sell currencies and assets seen as higher risk in favor of the perceived safety of the U.S. dollar.
Richard Franulovich, senior currency strategist at Westpac in New York, said the central banks appear to be "turning less accommodative," and that coupled with weaker-than-expected U.S. housing data was "giving the dollar a bid tone."
Sterling was also near a six-month low against the euro after Bank of England Governor Mervyn King told a regional British newspaper a weak pound was helping UK exporters and the economy cope with a sharp downturn.
The euro was last down 0.2 percent at $1.4695
More than 1,700 euro/sterling trades went through Reuters Matching in the hour after King's comments, the most in a single hour for at least three months, Reuters data showed.
The dollar was flat at 91.30 yen
The Federal Reserve, Bank of England, European Central Bank and Swiss National Bank simultaneously announced plans on Thursday to scale back their emergency lending programs that have injected trillions of dollars into banks. For more, see [ID:nN24448204]
That comes a day after the Fed kept interest rates at a record low and signaled they would stay there for a long time.
Joseph Trevisani, head market analyst at FX Solutions in Saddle River, New Jersey, said the central banks' modest retreat on liquidity provision "is not as important as it seems because a number of these programs had not been widely used."
G20 and FX
Analysts expected currencies to feature in some of the discussions among Group of 20 leaders in Pittsburgh when they begin meeting on Thursday.
Traders noted the contrast in King's comments with those from euro zone capitals suggesting some discomfort with the euro's recent strength and the need for the G20 to address global imbalances, notably Asian currency weakness.
German Chancellor Angela Merkel said currencies should be part of the discussion in Pittsburgh, and Finance Minister Peer Steinbrueck mentioned China's yuan as a focus for discussion.
The U.S. delegation was expected to push G20 leaders to address a lopsided global growth model by encouraging debtor nations such as the United States to save more and exporters like China, Japan and Germany to spend more.
But that would likely require a weaker dollar, and a French government source told Reuters this week that France is worried about euro strength against the dollar.
The euro has risen 5 percent against the dollar this year.
"I think there will be a fair bit of noise coming out of the G20 with respect to imbalances ... as well as currencies," said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto.
(Additional reporting by Jamie McGeever in London and Leah Schnurr, Gertrude Chavez Dreyfuss and Nick Olivari in New York; Editing by Chizu Nomiyama)