FOREX-Dollar climbs vs most majors; euro zone data weak

* Dollar rallies vs most majors

* German ZEW sentiment beats forecast; conditions weak

* Risk demand still low, Japan growth contracts

* For up-to-the-minute market news, click on FXNEWS (Recasts, updates prices, adds quotes)

By Nick Olivari

NEW YORK, Dec 9 (Reuters) - The dollar rose against most currencies on Tuesday though with no major U.S. data to provide direction, trading was based on technical levels or economic reports from the UK and elsewhere.

The euro clawed back from the session low with investors testing whether they can push the single zone currency through the upper level of its most recent range, analysts said.

Earlier the the market took its cue from investor sentiment in the euro zone's largest economy. The ZEW economic think tank's poll of German economic sentiment unexpectedly rose to -45.2 in December from -53.5 in November, but the current conditions component worsened. [ID:nSAB020603].

Uniformly grim UK economic data also put the British pound under pressure, as economists pointed to further cuts in Bank of England interest rates. [ID:nL9702067].

The dollar did trim losses against the yen and gains against the euro after a report showed a smaller-than-expected drop in pending existing home sales for October, which raised cautious optimism of some stability in the distressed housing market. [ID:nN0975120].

"There is some medium-term resistance at $1.2965 and that is a target dragging some players to test that level and if we break through, there will be a test of the psychologically important $1.3000 level," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon on the euro/dollar.

The euro was little changed against the dollar at $1.2935 midway through the New York session, down from a session peak of $1.2968 but also far above the session low of 1.2798, according to Reuters data.

Sterling fell 0.9 percent on the day to $1.4774, while the euro hovered near a record high against the UK unit .

"The ZEW is not going to do the euro any favors," said Ron Simpson, director of FX research at Action Economics in Tampa, Florida. "And incoming UK data is poor at best, putting the pound under pressure."

Demand for risk was generally low after figures earlier on Tuesday showed the Japanese economy contracted 0.5 percent in July-September, far more than an initial reading of a 0.1 percent decrease [ID:nT356356].

The dollar was 0.4 percent weaker against the yen at 92.43 yen .

Yen strength pushed the euro down 0.5 percent to 119.54 yen . The higher-yielding Australian and New Zealand dollars were down around 1.7 percent against the low-yielding Japanese currency.

Sterling also dropped 1.4 percent against the yen as investors continued to unwind carry trades, where the yen was used to fund investments in higher-yielding currencies.

Investors were also wary of taking on risk as they awaited a U.S. emergency loan package for its top three automakers, while figures late last week showed that the U.S. lost more than half a million jobs in November alone [ID:nN08534770].

"The harsh reality of global weakness is still coming through in markets," said Stephen Koukoulas, strategist at TD Securities in London.

Rapidly deteriorating economies have prompted central banks to slash rates aggressively.

The dollar was up 0.5 percent against the Canadian dollar at C$1.2602 after the Bank of Canada unexpectedly cut its key interest rate by 75 basis points to a 50-year low of 1.5 percent on Tuesday and declared the Canadian economy to be in recession. [ID:nBAC000266].

The greenback also gave up some gains against the loonie as the session wore on however, with the U.S. currency more than a Canadian cent off the session peak of C$1.2743. (Additional reporting by Veronica Brown in London) (Editing by Andrea Ricci)

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