* Sterling gains vs under-pressure euro after ECB * Hits 1-month high vs euro; early August high in view * But fragile UK economy could limit sterling gains * Pound hits 2-month low vs broadly firmer dollar By Jessica Mortimer LONDON, Sept 9 (Reuters) - Sterling rose to a one-month high against the euro on Friday as the single currency stayed under pressure after the European Central Bank European Central Bank backed off its policy of rising interest rates. However, it also hit a two-month low against a broadly firmer dollar, tracking sharp falls in the single currency, which fell to a six-month low versus the greenback. Analysts said concerns about a deepening euro zone debt crisis could help sterling rise further versus the euro, but a fragile UK economy and the risk of more stimulus from the Bank of England were seen limiting gains and keeping it weak versus the dollar. The euro fell as low as 86.49 pence, breaking below the August 19 low of 86.54 pence and leaving it just shy of the August 5 low at 86.44 pence. Below there would mark its weakest in more than three months, with the next target being the late May low of 86.11 pence. "There is scope for more weakness in euro/sterling and I see the 86.00 pence mark being tested in the next few weeks," said Audrey Childe-Freeman, currency strategist at JP Morgan Private Bank. "Sterling is shaky. The possibility of more quantitative easing in the UK has come back as a market risk and there is talk that the UK government's fiscal plan is too rigid, but sterling is still in a better position than the euro." Technical analysts said a weekly close below the 200-day moving average at 86.94 pence per euro would be seen as bearish and could spell further losses for the single currency. The euro has not closed below this technical level since February. The pound extended gains enjoyed versus the euro on Thursday on relief that the BoE held back from adopting more quantitative easing, as some in the market had positioned for. The vast majority of economists had thought it would hold off for now, but the minutes to the policy meeting later this month may reveal that more policymakers are coming to the view that extra stimulus will be needed. TWO-MONTH LOW VS DOLLAR Against the dollar, sterling was down 0.2 percent at $1.5925 , having hit a low of $1.5893, its weakest since July 12. Traders said losses accelerated after stop loss orders were triggered on the break below $1.5920 which took it below Thursday's low of $1.5914. They reported bids around $1.5800, though a fall below that level would leave the July low of $1.5781 in view. "The UK has a lot of problems of its own, with the economy sub-trend and really struggling, while the market keeps pushing back expectations for an interest rate rise. All of these will continue to weigh on sterling," said Geraldine Concagh economist at AIB Group Treasury in Dublin. There was little market reaction to data showing UK factory gate inflation higher than expected in August despite a sharp fall in input prices. Economists expect the BoE will need to see a marked fall in inflation before embarking on more QE.

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