* Sterling rises to one-week high versus dollar
* Solid UK jobs data, BoE minutes temper chances of more QE
* Focus to switch to data later this week, Q3 GDP next week
* But pound lower versus euro, having earlier hit 4-mth low
By Philip Baillie
LONDON, Oct 17 (Reuters) - Sterling rose to its highest in more than a week against the dollar on Wednesday helped by better-than-expected UK jobs data amid a generally weaker economic backdrop and fresh doubts over more monetary stimulus.
But euro was broadly firmer. The pound dropped at one point to a four-month low against the euro after Moody's affirmed Spain's rating, easing widespread fears of a downgrade to 'junk' status.
Solid UK jobs numbers tempered the prospect of more money printing from the Bank of England (BoE) as minutes showed members of the Monetary Policy Committee (MPC) were split over the need for more stimulus.
The pound rose around 0.4 percent on the day to $1.6178 , its highest since Oct. 5, with more gains likely to see it target the peak on that day of $1.6218.
"The unemployment data has definitely caught the market by surprise, and I don't think the market was expecting such a mixed set of minutes from the Bank of England," said Nawaz Ali, analyst at Western Union Business Solutions.
Data showed the number of Britons claiming unemployment benefit fell unexpectedly while employment hit a record high.
This raised the possibility that the economy may have staged a reasonable recovery in the third quarter after three consecutive quarters of contraction. The first estimate of third quarter gross domestic product is due next week.
Jeremy Stretch, head of currency strategy at CIBC Markets said the jobs data meant sterling should hold up well against the dollar at around $1.61 - $1.75.
"There is mostly constructive data coming out of the UK as we are in a phase of growth, although that is slow and turgid growth ... It is going to compare relatively well with the euro area," he said.
Retail sales data on Thursday and public borrowing on Friday will give further clues as to the broader health of the UK economy and on the prospects for a further bout of QE in November.
QE is usually negative for the pound as it increases the supply of the currency.
Most economists have been expecting the central bank to opt for more QE in November, though these forecasts may have been tempered by Wednesday's jobs data and BoE minutes.
Sterling pared earlier losses versus the euro towards the end of London trading but remained down on the day.
The euro was up 0.1 percent at 81.16 pence, off an earlier high of 81.37 pence, its strongest since mid-June.
A sustained break below its 200-day moving average around 81.12 pence could push the single currency lower, however.
"We do see some upside potential for euro/sterling, but it is more of a euro story than sterling," said RBS currency strategist Melinda Burgess, adding the euro could rise to 82-83 pence.
Analysts at BMO have a buy recommendation on the euro against the pound. The target a rise to 82.22 pence, with a partial take-profit at 81.50 pence and a stop at 80.20 pence.
In a note to clients they said the minutes and the data would give the pound "breathing space" but were not enough to justify abandoning "bullish euro/sterling positioning".