Sterling up vs weaker dollar; wary before BoE

* Sterling up 0.5 percent at $1.6501 GBP=D4

* Risk aversion eases as equity markets rebound

* Euro/sterling treading water before BoE decision

LONDON, Nov 4 (Reuters) - Sterling rose against the dollar on Wednesday as a rebound in share prices eased risk aversion, but market players remained wary ahead of the Bank of England's policy meeting the following day.

Sterling recouped losses made after the UK government said it would provide more funds to Britain's two largest retail banks on Tuesday. A subsequent fall in equity markets boosted the dollar to one-month highs against a currency basket on Tuesday.

UK shares .FTSE were up 0.8 percent in early trade.

Economic data released earlier in the day had little impact on the UK currency.

The Nationwide Consumer Confidence Index posted a reading of 72 last month, matching September's upwardly revised figure. It was the highest level since April 2008. [ID:nLAG005888]

Separately, British shop prices were flat in October compared with a year ago after falling in the previous two months, the British Retail Consortium said on Wednesday. [ID:nL3186531]