* Sudden pound plunge in early Asia trade shakes markets
* Later bounces from low but still down 1.2 pct on day
* Jitters over “hard Brexit” take toll on sterling (Updates prices adds comments)
By Masayuki Kitano and Lisa Twaronite
SINGAPORE/TOKYO, Oct 7 (Reuters) - Sterling recouped some of its losses after a precipitous plunge to a fresh 31-year low on Friday, but traders say the currency remains vulnerable to renewed selling due to anxiety over a “hard” exit by Britain from the European Union.
Earlier, the pound suddenly dived about 10 percent from levels around $1.2600 to $1.1378. The move occurred in a matter of seconds, in thin early Asian trade.
However, Thomson Reuters, which owns the Reuters foreign exchange brokerage platform RTSL, later said the outlying trade had been cancelled and that the low was revised to $1.1491 - still, the weakest level for sterling since 1985.
After a choppy early session, the sterling quickly recovered and was last fetching $1.2460, but down 1.2 percent on the day.
Sterling has been “on a precipice since Sunday, since Theresa May and the March Brexit negotiations,” said Sean Callow, senior currency strategist at Westpac.
“I think we’ve underestimated how many people had money positions for a very wishy-washy Brexit, or even none.”
French President Francois Hollande said on Thursday the European Union needed to remain firm with Britain after it appeared Prime Minister Theresa May had opted for a tougher exit from Europe.
Global markets have been on edge in recent days on worries about a “hard” exit by Britain from the EU and about May’s comments on the impact of loose monetary policy, which some saw as a thinly veiled attack on the Bank of England.
That left the pound in a precarious position.
“It seems like algorithm trading was behind all this in thin liquidity conditions,” said a trader for a North American bank, referring to Friday’s sudden plunge in the sterling.
“There were no reasons for sterling to make such big moves.... It was a crazy few minutes.”
Sterling has been wallowing at its lowest levels since the mid-1980s this week, on track for a weekly loss of around 4 percent, as investors grew anxious about the economic fallout of Brexit.
The weakness in the British pound helped support the dollar ahead of U.S. jobs data later on Friday.
The employment report is expected to show U.S. nonfarm payrolls rose by 175,000 jobs in the month, according to the median estimate of 100 economists polled by Reuters. A strong report would increase bets that the U.S. central bank is gearing up for a hike in December.
The euro hit a two-month low of $1.1110 at one point.
Against the yen, the dollar eased 0.1 percent to 103.82 yen , but was on track to rise 2.4 percent on the week. (Additional reporting by Cecile Lefort in Sydney and Hideyuki Sano in Tokyo; Editing by Lincoln Feast & Shri Navaratnam)