* Uncertainty over fate of U.S. carmakers sway markets
* Dent in risk appetite sends Aussie, kiwi lower
* Euro zone PMI little changed from flash estimate
* Markets keep eye on G20, ECB, U.S. jobs figures
(Recasts, adds quote, updates prices, changes dateline prvs TOKYO)
By Tamawa Desai
LONDON, April 1 (Reuters) - The dollar was supported on Wednesday as uncertainty over the fate of U.S. carmakers and falling share prices prompted investors to seek perceived safer assets and shun high yielders.
The U.S. currency gained earlier in the session after Bloomberg reported U.S. President Barack Obama has determined that a prepackaged bankruptcy is the best way forward for General Motors Corp (GM.N: Quote,Profile, Research, Stock Buzz), quoting people familiar with the matter. [ID:nSP488116]
But the dollar came off highs after a senior U.S. administration official said President Barack Obama's thinking on the crisis facing GM has not changed since Monday, saying the report was "not accurate". [ID:nWEN6720]
The euro backtracked from sharp gains the previous day, as European share prices were down some 1 percent in early trade.
By 0908 GMT, the euro was down some 0.4 percent at $1.3197 <EUR=>. Against the yen, the euro was down some 0.7 percent at 130.16 yen <EURJPY=>.
"With bankruptcy as a viable option for these carmakers, the news has helped sour risk sentiment," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi.
"The near-term impact will be negative," he added.
U.S. stock futures SPc1 were 1 percent lower, and fell as much as 1.9 percent at one stage.
The dollar fell about 0.1 percent to 98.68 yen <JPY=>.
But traders were wary of chasing prices aggressively ahead of key events later this week.
"Given the G20 meeting and the ECB policy announcement occur over the next couple of days, the market may err on the side of caution and not preferring not to test any key levels until the policy outlook becomes clearer," analysts at Calyon said in a note.
The ECB is widely expected to cut key interest rates by 50 basis points to a record low 1.0 percent, but focus is on discussion over unconventional measures, traders said.
Data on Wednesday showed the pace of euro zone factory activity eased slightly in March. The Markit Eurozone Manufacturing purchasing managers' index rose to 33.9 for March from 33.5 in February. That was revised down from a flash reading of 34.0 and forecasts for an unchanged figure.
The greenback had earlier risen to 99.48 yen, the highest since March 5, after the Bank of Japan's tankan survey showed confidence among Japan's big manufacturers fell to a record low of minus 58, down 34 points from the previous survey and the largest drop on record.
Reduced investor risk appetite sent higher-yielding currencies such as the Australian dollar lower, which was also dented by data showing Australian retail sales fell by the most in nine years, adding to the case for a cut in interest rates next week.
But influential central bank watcher and columnist Terry McCrann argued that the Reserve Bank of Australia would stand pat. McCrann gave no source for his belief but has been correct on enough RBA decisions to command market attention. [ID:nSYD469354]
The New Zealand dollar extended a big slide after New Zealand's central bank warned on Wednesday that a recent rise in market interest rates was unwarranted and out of sync with its view of the economy.[ID:nWEL436816] (Additional reporting by Satomi Noguchi in Tokyo; Editing by Andy Bruce)