* ECB holds rates at 1.5 percent
* ECB announces new liquidity measures
* Sterling drops to 14-mth low against dlr on BOE QE2 (Updates prices, adds comment, byline)
NEW YORK, Oct 6 (Reuters) - The euro climbed against the dollar for a third straight session on Thursday after the European Central Bank held rates steady, as expected, but announced new liquidity measures to support the region's ailing banks.
Few market participants, however, were convinced these new measures would be sufficient to resolve the debt crisis and most remained bearish on the euro for the rest of the year.
"We believe liquidity (measures) and, eventually, policy rate easing, are likely to remain a negative for the euro in the coming months and maintain a bias to sell rallies," said Vassili Serebriakov, senior currency strategist at Wells Fargo in New York.
"From a broader perspective, today's central bank moves could be seen as the first steps towards restoring broader market confidence, but more is likely needed before risk appetite makes a comeback," he added.
Jean-Claude Trichet, in his final press conference as ECB president, said the bank's Governing Council decided to launch a new covered bond purchase program totaling 40 billion euros. Covered bonds are backed by assets such as mortgages and public sector loans and perceived as safe and high-quality. Buying them could encourage further lending. For details, see [ID:nECBNEWS]
The ECB, which kept interest rates on hold at 1.5 percent, also threw another lifeline to commercial banks by renewing offers to lend them one-year funding in two operations, this month and in December. [ID:nL5E7L61YG]
In mid-afternoon trading, the euro
Despite a pick-up in the euro, fund managers remained bearish on the currency. And even though Greece has been temporarily relegated to the background until the International Monetary Fund, European Union, and ECB file their report on the country later this month, some are pricing in a default.
STILL NO SOLUTION TO DEBT CRISIS
"We are very cautious on the euro. A European solution to the debt crisis would be hard to come by. Ultimately a default by Greece in some form would be inevitable," said James Harries, fund manager at London-based Newton Capital. Harries helps oversees assets of about $11 billion.
Against the yen, the euro rose 0.4 percent to 102.90 yen
Optimism that Germany was moving to safeguard the financial sector and modestly improved U.S. economic data increased risk appetite and provided support for the euro after a volatile week in which the French and Belgian governments pledged to rescue troubled bank Dexia
Analysts said near-term risks for the euro remained high, although some saw a fall below $1.30 as a good buying opportunity, given that policymakers working toward a solution to the debt crisis would boost the euro.
In other currencies, sterling
Investors are now focusing on Friday's U.S. non-farm payrolls report for September, which is expected to show 60,000 new jobs created and an unemployment rate of 9.1 percent.
"While it is clear from the economic data that the U.S. is growing much below its capacity, we expect tomorrow's payroll report would likely exceed estimates," said Brown Brothers Harriman in a note, suggesting the U.S. economy remained on a growth path.
There's much optimism in the fact that U.S. private sector employers added 91,000 jobs last month, based on the ADP survey released on Wednesday. And while the ADP report is hardly a reliable indicator of overall U.S. non-farm jobs, its results were more in line with the improvement in the employment component of the Institute for Supply Management surveys.
The dollar dipped 0.2 percent against the yen to 76.630
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