Sterling drops vs dlr, but outperforms euro on Greece

* Sterling falls vs USD as risky positions cut

* Greece concerns help pound outperform euro

* Focus on BOE inflation report next week

By Anirban Nag

LONDON, Feb 10 (Reuters) - Sterling fell against the dollar on Friday as a setback in Greece's efforts to secure a bailout pushed investors to the safety of the greenback, although it also helped the pound climb against the euro.

With many investors looking to move out of the euro zone and into the safety of gilts, the pound was likely to post more gains against the euro, despite a fresh round of quantitative easing announced by the Bank of England this week, traders said.

The BoE pumped another 50 billion pounds into the economy to try and stimulate growth but sounded a bit more optimistic about an economic recovery. Still, many were wary of building bullish bets on the pound ahead of the BoE's inflation report next week.

"We are sticking with the broader theme of some dollar recovery next week, although if euro zone concerns escalated and triggered increased sovereign debt inflows to the UK from Europe, sterling may hold up well," said Derek Halpenny, European Head of currency research at Bank of Tokyo Mitsubishi.

"However, the BOE quarterly inflation report is likely to make for grim reading given the decision to increase gilt purchases by 50 billion pounds."

The central bank's inflation report will be released on Wednesday, a day after January inflation numbers.

Sterling was last down 0.4 percent at $1.5752 against the dollar, retreating from a 12-week high of $1.5929 hit earlier in the week. Traders said a Swiss bank was selling sterling with decent bids seen at $1.5730.

The euro fell 0.4 percent to 83.70 pence, having earlier pushed above 84 pence to its highest level in two weeks. There was support at the 21-day moving average and Thursday's low around 83.40 pence, and chartists said a break below that level could signal a test of January lows around 82.20 pence.

SAFETY FROM GREECE

Fresh political wrangling in Greece injected more uncertainty on whether Athens will secure an international rescue package, vital for it to stave off bankruptcy and default.

The leader of a far-right party in Prime Minister Lucas Papademos' coalition government, George Karatzaferis, said he could not support a harsh austerity programme being demanded as a condition of Greece accessing the bailout package it needs to avoid going bankrupt.

Although his party has only 15 deputies out of 300 in parliament, his comments drove nervous investors to sell riskier assets and currencies like sterling before the weekend.

Analysts said further jitters about Greece would probably push the pound higher against the euro.

Sentiment towards sterling has also been supported by a more upbeat statement from the BoE on Thursday. In contrast, investors still expect the euro zone's sovereign debt troubles and fiscal austerity measures to adversely impact growth.

The Bank of England said recent surveys painted a more positive picture of the UK economy and they expected inflation to fall below 2 percent in the medium term without more monetary support.

Data on Friday showed UK factory gate inflation dropped to its lowest in more than a year in January as input costs also rose at a much slower pace.

The drop was marginally smaller than economists had forecast, highlighting the risk that although consumer price inflation is likely to ease this year the decline may be slower than the BoE expects. That, along with an improvement in growth, could stay the BoE's hand for further easing.

"Though the BoE introduced a new round of QE, this was largely priced in so had little negative impact on sterling," Morgan Stanley said in a note.

"In addition, with the new round of QE scheduled to roll off in May, we expect little chance of a catalyst from the BoE to drive the pound lower in the near term." (additional reporting by Anirban Nag; Editing by Susan Fenton)