* Yen dips vs dollar on jitters about possible BoJ steps
* Strong UK data lifts sterling, pulls euro off lows
* Support for euro seen at 100-day MA around $1.2776
By Jessica Mortimer
LONDON, Aug 19 (Reuters) - The yen dipped against the dollar on Thursday as jitters about whether Japanese authorities would take new steps to rein in the yen's rise left investors reluctant to chase it higher.
Investors are watching to see if the central bank will take more monetary easing steps -- such as expanding liquidity -- ahead of a meeting between Prime Minister Naoto Kan and Bank of Japan Governor Masaaki Shirakawa expected on Monday.
Meanwhile, much stronger-than-expected UK retail sales data lifted sterling and helped the euro off earlier lows against the dollar, though lingering concerns about the health of countries on the euro zone's periphery kept it in negative territory.
"The UK numbers have boosted sentiment a little, but generally the mood in the market seems slightly on the pessimistic side and people are inclined to push the euro lower," said Gavin Friend, currency strategist at nabCapital.
At 0955 GMT, the dollar was up 0.2 percent at 85.57 yen JPY=, off a 15-year low of 84.72 yen hit on trading platform EBS last week.
The euro was 0.2 percent lower against the dollar EUR= at $1.2821, recovering after earlier trading below the $1.28 level.
Traders said there was support at the 100-day moving average around $1.2776, adding there was talk of options expiries on Thursday at $1.2800 and $1.2850, which may be exerting influence on the spot price level.
The euro's recovery came in tandem with a rise in sterling GBP=D4 which reversed early gains to jump more than a cent against the dollar after surprisingly strong retail sales raised hopes the UK's economic recovery could maintain its momentum.
UK retail sales rose nearly three times faster than expected, while public borrowing also fell. [ID:nUKLJJE638] Sterling was up 0.2 percent at $1.5632.
The euro came under pressure in early trade after a report on the website of German magazine Der Spiegel said austerity steps to fix Greece's debt were harming the Greek economy.
For a link to the article see: link.reuters.com/vyf85n
MORE BOJ MEASURES?
The yen slipped as rumours circulated earlier that the Bank of Japan would hold an emergency policy meeting. Although sources later said this was unlikely [ID:nTKW007065], market jitters kept the yen away from 15-year highs versus the dollar.
"There was a lot of speculation about whether the BoJ would hold an emergency meeting. It didn't happen but there is still tension and nervousness about what action the BoJ could take," said Niels Christensen, currency strategist at Nordea in Copenhagen.
The euro fell 0.1 percent against the yen EURJPY=R to 109.75 yen, but stayed off a seven-week low of 109.07 yen hit on EBS earlier this week.
Japan's Sankei newspaper said on Thursday the BOJ has started considering additional monetary easing steps in line with government efforts to support the Japanese economy.
The most likely option is expanding the BOJ's fund-supply tool put in place in December, it said, without citing sources. The central bank may either expand the fund supply volume, or extend the duration of cheap, fixed-rate loans to banks to six months from three months, it said. [ID:nTOE67H06U]
Analysts said such measures may have limited effect in weakening the yen. However, most in the market do not expect Japanese authorities will intervene directly to curb the yen's rise unless the dollar falls closer to the 80.00 yen mark.
nabCapital's Friend said the dollar could resume falls versus the yen next week if details of further easing measures are scant. (Additional reporting by Kaori Kaneko in Tokyo; Editing by Susan Fenton)