* Fed's Powell pledges patience, sensitivity to risks in markets
* Robust employment report underscores U.S. economic strength (Recasts; adds Powell news, analyst comments; updates rates)
By Saqib Iqbal Ahmed
NEW YORK, Jan 4 (Reuters) - The U.S. dollar slipped against the euro on Friday, giving up all the gains logged after a robust U.S. jobs report, following comments from Federal Reserve Chairman Jerome Powell that the U.S. central bank will be sensitive to the downside risks the market is pricing in.
"We will be patient as we watch to see how the economy evolves," Powell told the American Economic Association on Friday.
Powell said the Fed is not on a preset path of rate hikes and suggested that it could pause on its policy tightening as it did in 2016.
"Powell's comments that the Fed is prepared to alter policy expectations quickly and flexibly are weighing on the U.S. dollar and giving risk sentiment a boost," said Eric Viloria, FX strategist at Credit Agricole in New York.
"Overall, Powell’s tone is cautious which is contributing to U.S. dollar softness," Viloria said.
The euro was 0.13 percent higher against the greenback.
The dollar's weakness was a reversal from earlier in the session when it rose after data showed U.S. employers hired the most workers in 10 months in December while boosting wages. Nonfarm payrolls rose by 312,000 jobs, compared with an expected 177,000.
The report contrasts with reports this week signaling the global economy is slowing. China posted data showing factory activity contracted for the first time in 19 months in December, and there is evidence of weak manufacturing across much of Europe and Asia.
"I think he (Powell) was not as forceful as some people, myself included, expected him to be. That is what took a bit of the wind out of the sails of the dollar, especially after a somewhat solid nonfarm payroll report," said Alfonso Esparza, senior currency analyst at OANDA in Toronto.
Against the Japanese yen, the U.S. dollar was 0.62 percent higher.
The greenback, which had slipped against the safe-haven Japanese yen in recent days amid worries about a slowdown in global growth, found support earlier in the session after China announced new measures to support its economy and hopes grew that upcoming U.S.-China trade talks would make some progress.
Market sentiment improved when China confirmed that trade talks with the United States would be held in Beijing on Jan. 7-8.
China's central bank slashed the amount of cash that banks must hold as reserves for the fifth time in the past year, the latest effort to free up new lending and reduce the risk of a sharp economic slowdown.
The Australian dollar recovered after being hit hard in Thursday's scramble for safety and was up 1.44 percent.
Most emerging-market currencies rebounded. The South African rand and the Turkish lira each gained about 2 percent against the greenback.
The Canadian dollar logged its third consecutive day of gains after touching an almost 20-month low earlier in the week.
Sterling jumped on Friday after suffering heavy losses spurred by fears of a global economic slowdown, but uncertainty about Brexit kept its gains in check. (Reporting by Saqib Iqbal Ahmed Editing by Frances Kerry and Susan Thomas)