* Euro/sterling gains run out of steam * Sterling rises vs dollar on steady corporate buying * UK data helps, but risk more QE to check gains LONDON, Feb 24 (Reuters) - Sterling pulled away from a 2-1/2 month low against the euro on Friday and made robust gains against the dollar on steady demand from corporates, although expectations of more monetary stimulus by the Bank of England were likely to check gains. The British pound was sold off against the euro by model funds and real-money investors early in the European session after Bank of England policymaker Paul Fisher said in a newspaper interview that the outlook for the British economy was still uncertain and that he was keeping an open mind on whether more easing would be required. That chimed with dovish minutes of the Bank of England's latest rate setting committee released earlier in the week and drove some investors to cut their long sterling/short euro positions. But that selling ran out of steam with some investors drawing comfort from encouraging economic data. Data released on Friday showed headline gross domestic product contracting 0.2 percent quarter-on-quarter in the fourth quarter, with a modest downward revision in the year-on-year rates, from 0.8 percent to 0.7 percent. While business investment was weak, consumption returned to growth having flatlined or fallen in the past few quarters.. "The GDP data showed the UK consumer was still holding up, while the euro's move higher against sterling didn't last too much longer above 85 pence," said Jeremy Stretch, head of currency research at CIBC World Markets. The euro was last down 0.3 percent at 84.73 pence , having risen to 85.06 pence, its highest level since Dec. 12. Near term resistance is seen at around 85.25 pence, the 50 percent retracement of its drop from a high of 88.31 pence in late October to a low 82.20 pence in early January, and then at 85.55 pence - the high struck on Dec. 12. The common currency has been broadly higher this week on investor relief that a second bailout package for Greece was approved by European authorities, helping stave off a chaotic sovereign default in March. Better-than-expected German business sentiment has also helped the common currency. "From here on it's a more neutral story and as we get to the 85.20 pence and 85.50 pence area, it will become harder for the euro to push higher," said Adrian Schmidt, FX strategist, at Lloyds TSB. CABLE STRONGER An overall improvement in risk appetite bolstered sterling along with some robust buying by corporates, traders said. Sterling was last up 0.5 percent at $1.5810, tripping stops above $1.5760 and extending gains into a second straight session. Resistance is at $1.5825 - the low struck on Monday - with near term support seen at its 100-day moving average of $1.5699. Analysts said despite improving UK data, downside risks to the economy remained as tough austerity measures bite into growth, a sluggish labour market crimps consumer spending and given Britain's strong links with the euro zone. The prospects of a damaging recession in the UK have been waning with recent data showing some pick up in activity, but minutes earlier this week reminded investors that monetary policy is likely to stay easy for some time to come. BoE minutes on Wednesday showed two policymakers voted to pump an extra 75 billion pounds into the economy rather than the 50 billion that was eventually endorsed, raising the possibility the bank may opt for another round of asset purchasing. "The potential for further BoE easing, as highlighted by the more dovish-than-expected MPC minutes, will likely keep the pressure on the downside for sterling/dollar," Morgan Stanley said in a note. "We look to sell sterling on rallies," they added, targeting a drop to $1.52. (Reporting by Anirban Nag; Editing by Ruth Pitchford)

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