* Dollar falls, euro gets support from stocks, PMIs report
* Markets await U.S. jobs report, ECB meeting on Thursday
* Foreign exchange trading remains volatile (Adds comments, details)
By Vivianne Rodrigues
NEW YORK, July 1 (Reuters) - The dollar fell on Wednesday, as gains in global stocks as well as improved manufacturing activity data in Europe and China, hurt demand for the greenback as a safe haven.
The European data showed a slowing in the deterioration in the euro zone's manufacturing economy for the fourth straight month, indicating the bloc will contract by much less in the second quarter.
In China, surveys released on Wednesday also showed a steady recovery in the country's manufacturing sector in June.
In the United States, a round of mixed data including readings on the labor, manufacturing and housing sectors, contributed to a bias toward dollar weakness as safe-haven support wanes, analysts said. But they warned trading would remain volatile before a key U.S. labor market reading on Thursday.
Volume is also expected to dwindle ahead of the U.S. Independence Day holiday on Friday.
"Reflecting the thin trading conditions, the forex markets remain indecisive. However, market participants appear more inclined toward optimism than pessimism," said Nick Bennenbroek, head of currency strategy, at Wells Fargo Bank, in New York. "While price action is choppy, the bias toward optimism is contributing to a bias toward dollar weakness."
Wall Street stocks rose despite a report that showed U.S. private employers cut 473,000 jobs in June, more than expected but less than the 485,000 jobs lost in May.
In late-morning trading in New York, the euro was up 0.8 percent on the day at $1.4140, after earlier trading as high as $1.4170, nearing its highest level since June 11, according to Reuters data.
"The (ADP) number was about 80,000 worse than what was expected, so that's a pretty huge disappointment for the market," said Jacob Oubina, a currency strategist at Forex.com, in Bedminster, New Jersey. "But I would say that investors should probably take this number with a grain of salt."
Another industry reading showed the U.S. manufacturing sector shrank in June but at a slower pace than during the prior month and a report showed pending sales of previously owned U.S. homes rose slightly in May, the fourth straight monthly gain.
US PAYROLLS, ECB MEETING
Economists expect the U.S. economy to have shed 363,000 jobs in June after losing 345,000 in May. Also on Thursday, the European Central Bank holds its policy meeting.
The ECB is expected to leave rates unchanged and give more details on its asset buying program.
"Despite the event risk associated with tomorrow's ECB decision and non-farm payrolls figure, the market seems remarkably comfortable selling the dollar in increasingly illiquid trading conditions," Michael Woolfolk, a senior currency strategist at The Bank of New York Mellon said in a note. "Part of this obviously reflects a relatively high degree of risk tolerance, but part of this also reflects growing sentiment for a weaker dollar."
Meanwhile, the yen struggled broadly as Japanese institutional investors sold the currency at the start of the new quarter, along with a smaller-than-forecast improvement in the Bank of Japan's June tankan corporate survey.
The dollar rose 0.3 percent to 96.55 yen while the euro gained 1 percent to 136.56 yen.