* Dollar slides broadly, investors shift to risky assets
* Dollar stays under selling pressure despite strong ISM
* Losses limited due to weaker European shares
(Adds comment, updates throughout; previous TOKYO)
By Naomi Tajitsu
LONDON, Jan 5 (Reuters) - The dollar slipped across the board on Tuesday as investors poured fresh funds into riskier assets at the start of the year, and as the market awaited U.S. employment figures due later in the week.
The U.S. currency reversed gains made against the euro and the yen made at the end of 2009, unable to capitalise on a strong reading of U.S. manufacturing released on Monday.
"The ISM data showed that not all positive macroeconomic data is positive for the dollar," said Sven Schubert, currency analyst at Credit Suisse in Zurich.
"This could be seen as a sign we are still in a phase of dollar weakness."
He said dollar sentiment would stay weak due to expectations U.S. interest rates will remain low, which would keep any U.S. yield advantage over other countries minimal at best, and to concerns about the U.S. fiscal position.
Comments from Federal Reserve Governor Elizabeth Duke on Monday bolstered the view U.S. rates will stay low as the economy recovers modestly. She said rates needed to be kept "exceptionally low" for an "extended period". [ID:nN04212241]
By 0909 GMT, the euro <EUR=> was up 0.1 percent at $1.4425, having climbed to around $1.4480, its strongest in nearly three weeks.
The dollar pared some losses as an early slide in European shares curbed demand for riskier assets. Still, a rise in oil and gold prices suggested risk appetite was buoyant as fund managers rebuild their portfolios at the start of the year.
Data on Monday showed U.S. factories marked their best month in nearly four years [ID:nSGE60301H]. However, this failed to translate into dollar gains. Versus the yen, the dollar <JPY=> fell 0.7 percent to 91.90 yen, putting the U.S. currency on track to post its biggest one-day percentage loss since in roughly a month.
The dollar index <.DXY>, which tracks its performance against a basket of currencies, slipped 0.2 percent on the day.
For much of the past year, expectations that U.S. interest rates would stay low for a long time spurred investors to sell the greenback to purchase riskier and high-yielding assets.
But that pattern was interrupted in December on position-closing before the year-end, and as signs of an improving U.S. economy prompted some to believe the Federal Reserve could start to tighten monetary policy in 2010.
The dollar's year-end gains were reflected in the latest data from the Commodity Futures Trading Commission released on Monday, which showed an increase in long dollar positions for a second straight week to Dec. 29. [ID:nN04195958
This marked the biggest net long position for the dollar -- essentially bets the U.S. currency has room to rise -- since late April, according to Reuters calculations.
Some analysts said the long positioning merely suggested shorts had been closed out, and did not necessarily indicate the dollar would post more significant gains in the near term.
Market participants awaited data on U.S. factory orders and pending home sales due later in the day to gauge whether the economy was continuing to improve.
U.S. payrolls data for December, due on Friday, are seen offering more direction for the dollar. The median forecast of analysts polled by Reuters is for a decline of 8,000. [ECI/US]
(Additional reporting by Tokyo Forex Team, editing by Nigel Stephenson)