* Dollar index flat at 76.932 <.DXY>; Aussie/yen up 1.1 pct
* Liquidation of cross/yen long positions runs its course
* Euro hovers near $1.4500 <EUR=> as selling peters out
* German 2009 GDP falls 5.0 pct
(Adds data, quotes, updates prices)
By Tamawa Desai
LONDON, Jan 13 (Reuters) - The dollar steadied on Wednesday while the yen fell broadly as investors concluded China's surprise monetary tightening the previous day would not derail growth, supporting higher-yielding currencies.
Commodity-linked currencies such as the Australian dollar regained ground, but the market was still rattled because the withdrawal of liquidity as economies recover and central banks focus on inflation risks could prompt investors to unwind positions in perceived riskier assets.
"Speculation that China will continue to remove some of its measures will keep the forex market on its toes. No doubt sentiment will swing between risk aversion and appetite depending on rhetoric from policymakers," said Stuart Bennett, currency analyst at Calyon.
By 1005 GMT, the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was flat on the day at 76.932 <.DXY>.
The yen pared gains made the previous day after China's central bank raised banks' required reserves ratio, which prompted investors to unwind yen-selling positions.
The dollar rose 0.4 percent to 91.35 yen <JPY=>, after falling to as low as 90.73 yen on Tuesday. The euro was up 0.5 percent to 132.54 yen <EURJPY=R>, after falling 1.4 percent.
The Australian dollar climbed 1.1 percent to 84.63 yen <AUDJPY=R>, after its biggest daily drop in eight weeks. It also rose 0.5 percent to $0.9252 <AUD=D4>, after falling more than 1.2 percent on Tuesday.
EURO DIPS THEN RECOVERS
The euro hovered around $1.4500 to trade flat on the day after earlier dipping on data that showed German gross domestic product contracted by a record 5.0 percent last year, worse than forecasts for a 4.8 percent decline. [ID:nLDE60C0G9]
But the single currency was hampered by ongoing concerns about Greece's fiscal situation.
"A large part of the euro gain in 2009 was due to the unwind of the dollar safety trade and as that has played out the euro is now faced with its own headwinds," said Geoffrey Yu, currency strategist at UBS in a note. "The Greek situation remains at the forefront of the issues."
U.S. ratings firm Moody's Investors Service said 2010 was likely to be challenging for European sovereign risk.
The U.S. dollar was mildly supported after two U.S. Federal Reserve policymakers said on Tuesday the central bank needs to guard against the potential for inflation. [ID:nN12181742]
Sterling touched a near one-month high of $1.6267 after Bank of England policymaker Andrew Sentance said in a newspaper interview published on Wednesday the central bank is close to holding back on stimulus [nLDE60C09R].
The Swiss franc briefly dipped against the euro to 1.4804 francs as traders noted talk of bids from the Bank for International Settlements (BIS) which sometimes acts as an agent in the currency market for individual countries' central banks. The euro was last up 0.2 percent at 1.4780 francs <EURCHF=>.
Market players will keep an eye on U.S. corporate earnings results and the fallout from a potential U.S. government levy on banks. The chief executives of Wall Street's biggest firms are scheduled to testify before the U.S. Congress about the global financial crisis. (Editing by Stephen Nisbet)