* ECB in focus; traders unsure ECB will lift sentiment

* Strong Aussie jobs, China trade data help risk appetite

By Jessica Mortimer

LONDON, June 10 (Reuters) - The euro rose on Thursday after the head of China's national pension fund said the currency would weather Europe's debt crisis, though caution before a European Central Bank policy decision capped gains.

Dai Xianglong, chairman of $114 billion China's National Social Security Fund, said the euro would gradually stabilise and that the U.S. fiscal deficit remained a big concern, tempering safe-haven demand for the dollar.

The comments helped lift the euro above $1.20, but it stayed in a range. Traders said investors were inclined to sell on rallies towards $1.21 but that there were bids closer to $1.20, adding that option expiries at $1.20, $1.21 later in the day may confine the single currency around those levels.

Some in the market have said the euro zone debt crisis could prompt central banks, including China's, to cut their euro reserves.

Market players were wary of taking on long euro positions ahead of the ECB decision, while technical analysts said the euro's downward trend would remain intact barring a move above $1.2135, the 50 percent retracement of the 2000-2008 euro rally.

Sentiment has improved since yesterday, but the risk is that the ECB press conference could see the euro come under pressure again, said Antje Praefcke, currency strategist at Commerzbank in Frankfurt.

If they continue to buy bonds that may be seen as positive, but on the other hand they haven't succeeded so far in stabilising yields.

At 0752 GMT, the euro was up 0.3 percent against the dollar EUR= at $1.2023. It has risen about 1.5 percent since hitting a four-year low of $1.1876 on trading platform EBS on Monday.

The ECB is expected to hold rates at 1.00 percent. It could offer extra funds to banks to ease strains from the debt crisis, and ECB President Jean-Claude Trichet will be pressed for details of its government bond-buying programme.

The ECB's decision is scheduled for 1145 GMT, with Trichet's accompanying news conference at 1230 GMT.

Against the yen, the euro rose 0.1 percent to 109.50 yen EURJPY=R. The dollar was down 0.2 percent at 91.04 yen JPY=.

Traders said the dollar was being supported by Japanese importer and investor demand around 90.90/91.00, just ahead of its 200-day moving average at 90.90 yen, but that a move below there could trigger sell orders.

AUSSIE, KIWI GAIN

The Australian dollar AUD=D4 rallied as much as 1.5 percent after Australia added 26,900 jobs in May, more than expected, sparking talk of further rate hikes. [ID:nSGE6580KR]

It last traded up 1.2 percent at $0.8378 AUD=D4. The Aussie was also helped by China confirming exports jumped 48.5 percent in May from a year earlier.[ID:nTOE65605K]

The data from Australia and China, together with remarks from (Fed Chairman) Bernanke yesterday on the U.S. economy, suggest that the European debt problems have so far not been damaging economies elsewhere, said Minoru Shioiri, chief manager of forex trading at Mitsubishi UFJ Morgan Stanley Securities in Tokyo.

The New Zealand dollar NZD=D4 rose after the country's central bank raised interest rates for the first time since the global crisis, as widely expected. [ID:nSGE65701N] [nWEL004070]

(Additional reporting by Satomi Noguchi in Tokyo)

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