* Sterling higher vs dollar, falls vs euro * Weak U.S. jobs data sparks dollar selling, euro recovery * Little reaction as UK services PMI dips as expected LONDON, Dec 3 (Reuters) - Sterling rose against a weaker dollar on Friday after weak U.S. jobs data put the U.S. currency under broad selling pressure, but the pound continued to weaken against the euro. Labor Department data showed U.S. non-farm payrolls rose 39,000 last month, much weaker than expectations for 140,000 new jobs. The unemployment rate also increased to 9.8 percent. [ID:nN02238002]. The weak numbers sparked a slide in the dollar, which also encouraged investors to further reduce short euro positions built up as a result of recent worries about debt problems in some euro zone countries. Although the debt crisis continues to weigh on euro sentiment, talk that the European Central Bank has been buying Portuguese and Irish bonds has eased investors' concerns and helped the euro recover. With the market focus firmly on events in the United States and the euro zone, sterling was left in between -- gaining against the dollar but underperforming the euro. "A lot of people had been starting to take some profit on dollar longs in the last 48 hours and that has accelerated after the non-farm payrolls and ahead of the weekend," said Michael Derks, currency strategist at FXPro. "The focus is very much on the dollar and the euro and sterling are just humming along." He added that there were concerns among investors about the UK banking sector's exposure to the debt problems in the euro zone -- especially in Ireland and Spain -- but that for now this was just a risk and probably more a story for 2011. Sterling GBP=D4 was up 0.5 percent against the dollar to $1.5691, keeping well above a two-month low of $1.5485 hit on Tuesday. The euro EURGBP=D4 rose 0.5 percent to 85.10 pence, close to a high hit on Monday of 85.40 pence. This took it back above its 100-day moving average, with the 200-day moving average the next target at 85.46 pence. The pound showed little reaction to data showing UK services sector activity eased last month in line with forecasts. [ID:nLDE6B20PD] Some had speculated that the data could beat expectations after this week's surprisingly strong manufacturing activity data. "Sterling is consolidating in ranges at the moment. All the focus is on Europe and any movement in sterling is just a fallout from that," said Geraldine Concagh, economist at AIB Group Treasury in Dublin. Technical analysts said bearish momentum in the euro may have waned for the time being, after it fell to its lowest in two-and-a-half months at 83.34 pence earlier this week. But traders and analysts said euro selling could resume, with investors wary about how long the ECB would continue to buy bonds after the bank's President Jean-Claude Trichet on Thursday did not explicitly commit to ramping up bond-buying. [ID:nLDE6B10I4] (Editing by Susan Fenton)

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