* Market focused on U.S. non-farm payrolls
* Weaker-than-expected data may bolster QE3 hopes, weigh on USD
* Euro's outlook still weak, ECB meeting next week eyed
* Talk of euro double no-touch barriers at $1.42 and $1.46
* Euro supported by talk of bids by Asian sovereign players (Updates prices)
By Masayuki Kitano and Ian Chua
SINGAPORE/SYDNEY, Sept 2 (Reuters) - The euro steadied on Friday after a drubbing overnight on weak euro zone data, supported by talk that Asian sovereign players were buying the single currency to defend an option barrier.
Some traders said the euro may trend lower in coming days, given growing worries about the euro zone growth outlook and the possibility of the European Central Bank softening its hawkish stance at next week's policy meeting.
Data on Thursday showed manufacturing in the euro zone contracted for the first time in almost two years and a Spanish bond sale drew lukewarm demand.
"Any hint of an easing bias from the ECB would accelerate EUR breaking the bottom of the recent range of 1.41-1.45," analysts at BNP Paribas said.
The euro held steady near $1.4262 , holding above a three-week low around $1.4227 hit the previous day.
Traders in Tokyo said there was some euro-buying to defend an option barrier at $1.4200. Traders said the barrier is the downside leg of a double no-touch option with barriers at $1.42 and $1.46, thought to be held by an Asian sovereign player.
Boding ill for the euro is its drop below an upward trendline drawn through its mid-July low and troughs hit in early August. The trendline now comes in near $1.4295 and may serve as resistance.
In addition, traders said option positions built up during the last couple of days suggest some players are positioning for a break to the downside, targeting $1.3850.
The euro would have to breach a series of support levels before dropping that far, including its Aug. 12 intraday low near $1.4150 and its Aug. 5 intraday trough of $1.4055.
Lower down, the euro's 200-day moving average offers support near $1.4005, and an upward trendline drawn off lows hit in June 2010 and January 2011 lies roughly around $1.3930.
The Australian dollar dipped as U.S. stock futures
But the Aussie only fell modestly, dipping 0.2 percent to $1.0709 , and some traders attributed the dip in U.S. stock futures to position unwinding ahead of a long U.S. weekend, with the U.S. Labor Day holiday coming on Monday.
JOBS DATA
The market's focus is on U.S. jobs data due later on Friday, the last nonfarm payrolls report before a Fed policy meeting later this month at which many market participants are expecting some sort of additional easing.
Unemployment is a key determinant in whether the Fed takes additional action to support the economy.
Market players say expectations for the jobs data have been lowered after the employment gauge in a U.S. manufacturing survey released on Thursday dipped to its lowest level since November 2009.
A strong result could trigger a bigger reaction than a weak outcome, said Adarsh Sinha, Asia-Pacific G10 FX strategist at Bank of America Merrill Lynch in Hong Kong.
"I think expectations are probably pretty pessimistic going into payrolls," Sinha said. Economists polled by Reuters are expecting the payrolls data to show an increase of 75,000 jobs.
Sinha, however, said that the market may now be bracing for a smaller increase of about 40,000 jobs.
"If it's better than expected, then the market is going to price out expectations of further easing to some extent... I would expect that to be a dollar positive scenario," he said.
The dollar index, which measures the dollar's value against a basket of currencies, was little changed at 74.515 , hovering near a three-week high of 74.714 hit on Thursday.
The yen showed little reaction to news that new Japanese Prime Minister Yoshihiko Noda picked Jun Azumi, a former parliamentary affairs chief for the ruling Democratic Party, to become the new finance minister.
"I don't think there will be any major changes to Japan's yen intervention policy, but there's a bit of uncertainty because we don't know his personal stance, so it's really hard to say anything," said Koji Fukaya, director of global foreign exchange research at Credit Suisse Securities in Tokyo.
The dollar dipped 0.1 percent to 76.85 yen . (Additional reporting by Antoni Slodkowski in Tokyo and IFR's John Noonan in Sydney)