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

* Euro flops vs dollar , yen

* 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, changes byline, changes dateline, previous LONDON)

By Nick Olivari

NEW YORK, Dec 9 (Reuters) - The dollar gained against most currencies, including the euro, on Tuesday though with no major U.S. data scheduled for release, investors took their cue from investor sentiment in the euro zone's largest economy.

The Mannheim-based ZEW economic think tank's poll of economic sentiment unexpectedly rose to -45.2 in December from -53.5 in November, but the current conditions component worsened. [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. [nL9702067].

"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."

The euro fell 0.9 percent to $1.2821 in early New York trade, down from a session peak of $1.2968, according to Reuters data, its strongest level since November 25.

Sterling fell 1.4 percent on the day to $1.4695, while the euro hovered near record highs reached the previous day against the UK unit .

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 0.3 percent weaker against the yen at 92.54 yen .

Yen strength pushed the euro down 1.2 percent to 118.70 yen . The higher-yielding Australian and New Zealand dollars were down more than 2 percent against the low-yielding Japanese currency.

Sterling also dropped 1.7 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 0.9 percent against the Canadian dollar at $1.2661 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]. (Additional reporting by Veronica Brown in London) (Reporting by Nick Olivari, Editing by Chizu Nomiyama)

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