* Aussie dollar slides after local jobless rate hits highest since 2003
* Euro nurses wounds after ECB official's talk of negative deposit rate
* Focus on U.S. retail sales later in day to give dollar incentive
By Ian Chua and Shinichi Saoshiro
SYDNEY/TOKYO, Feb 13 (Reuters) - The Australian dollar fell sharply on Thursday after an unexpectedly weak employment report revived speculation that a rate cut may yet be put back on the table.
The euro meanwhile continued to nurse losses after suffering a setback on dovish comments from a top European Central Bank official.
Data released on Thursday showed a net 3,700 Australian jobs were lost in January, although analysts polled by Reuters expected a rebound of 15,000 jobs. Unemployment rose to 6.0 percent in January, the highest level since July 2003 and well above forecasts of 5.8 percent.
The Australian dollar fell 1.1 percent to $0.8928, pulling back from a one-month peak of $0.9068 reached on Wednesday. It shed 1.2 percent to 91.34 yen
The Aussie also pared gains on the euro, which bounced back to A$1.5205 from a two-month trough of A$1.4977 plumbed overnight.
"Today's (Aussie) currency moves show that easing expectations are being revived again," said Koji Fukaya, chief executive officer at FPG Securities.
The euro struggled to gain traction on Thursday. The common currency suffered a setback the previous day on dovish comments from European Central Bank Executive Board member Benoit Coeure who said the idea of cutting into negative territory the ECB's overnight deposit rate was "a very possible option",
The euro edged up 0.1 percent to $1.3607, but remained below a two-week high near $1.3683 that had been set on Tuesday. Against the yen, the euro slipped 0.1 percent to 139.27 yen.
"Being a member of the six person Executive Board, Coeure's comments cannot be lightly dismissed and stoke expectations for action at the March meeting," said Sean Callow, currency strategist at Westpac in Sydney.
Against sterling, the common currency touched a three-week low of 81.80 pence.
Sterling made broad inroads against other currencies as well after the Bank of England revised up its growth forecast for 2014 to 3.4 percent from 2.8 percent, a much more bullish outlook than that of most economists.
It also hinted that interest rates could start to rise from record lows in little more than a year.
"One of the fastest growing developed economies in Europe, the United Kingdom may be the first to see its policies exit the post-crisis management era," said Christopher Vecchio, analyst at DailyFX.
The pound edged up 0.1 percent to $1.6615, having rallied 0.9 percent against the greenback on Wednesday.
With market action centred on the Aussie, euro and pound, the dollar and yen were pretty much left to their own devices.
The greenback eased 0.2 percent to 102.36 yen.
The market will look to the weekly U.S. jobless claims and January U.S retail sales data due later on Thursday for direction for the dollar.
- Europe News