Sterling edges up vs dollar, Greece in focus

* Sterling steady in aftermath of 50 bln pound QE boost

* Greece concerns limit gains in perceived riskier currencies

* UK PPI data shows inflation easing

By Nia Williams

LONDON, Feb 10 (Reuters) - Sterling inched higher against the dollar on Friday on the view that the UK economic outlook is improving, offsetting lingering concerns about a Greek bailout deal which dampened risk appetite in markets globally.

Many analysts said the pound was performing well despite the increase in quantitative easing by the Bank of England on Thursday, which involves flooding the economy with pounds, but moves in sterling were likely to be dictated by wider market appetite to take on risk.

The BoE's decision to pump another 50 billion pounds into the economy to try and stimulate growth was less than some in the market had expected, suggesting the bank is not too pessimistic about the economy.

Developments in Greece remained firmly in focus. Greek political leaders said they had clinched a deal on economic reforms needed to secure a second EU bailout, but euro zone finance ministers demanded more steps and a parliamentary seal of approval before providing the aid.

Sterling was last up 0.1 percent at $1.5830 against the dollar, retreating from a 12-week high of $1.5929 hit earlier in the week, with offers cited around $1.5840.

The euro slipped 0.3 percent to 83.74 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 technical strategists said a break below that level could signal a test of the January lows around 82.20 pence.

"We have a slightly more risk averse environment today but sterling has performed relatively well in the aftermath of QE," said Simon Derrick, head of currency research at Bank of New York Mellon.

Analysts said further jitters about Greece would probably push the pound higher against the euro, but put it under pressure against the safe haven dollar.

The Bank of England said on Thursday it would keep interest rates on hold at a record low 0.5 percent and buy another 50 billion pounds of assets to boost growth, less than the 75 billion pound injection some in the market had positioned for.

Sentiment towards sterling was also supported by a more upbeat statement from policymakers.

"If the BoE had been feeling really grim they would have done 75 billion. It's inherent in the more moderate approach that they were more optimistic about the outlook," said BNY's Derrick.

Policymakers 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.

INFLATION SEEN EASING

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.

"Inflation is clearly an element (that) is getting more favourable and helps the outlook on UK consumption," said Derek Halpenny, European head of currency research at Bank of Tokyo-Mitsubishi.

A better economic outlook would suggest less need for more monetary easing in future. Reduced inflation could also help real UK yields rise, further supporting the pound.

Sterling has been boosted in recent months as investors seeking a safe haven from the euro zone debt crisis have redirected portfolio flows out of euro zone sovereign bonds and into UK gilts.

"From a euro/sterling perspective we think the safe haven status will probably persist assuming we get an escalation again in risk aversion," said Bank of Tokyo-Mitsubishi's Halpenny, who saw the euro trading around 83 pence over the next few months.

"It may not come immediately but we suspect the euro will come under pressure and peripheral yield spreads will widen yet again in the next few months." (Editing by Susan Fenton)