* DXY skids to 7-month lows as nonfarm payrolls rise falls short
* Sterling pressured after attack ahead of this week's election
TOKYO, June 5 (Reuters) - The dollar nursed losses on Monday, coming close to a seven-month low against a currency basket plumbed after disappointing U.S. employment data prompted investors to pare back their expectations of future U.S. Federal Reserve rate hikes.
The dollar index, which tracks the greenback against a basket of six major currencies, was flat in early Asian trading at 96.736 .DXY but not far from Friday's nadir of 96.654, its lowest since Nov. 9.
Sterling edged down, under pressure after the third terrorist attack in Britain in less than three months killed at least seven people on Saturday. attack came days ahead of Thursday's UK election, in which polls show British Prime Minister Theresa May's lead over the opposition Labour Party is still intact but has narrowed. nonfarm payrolls rose by 138,000 in May, Labor Department data showed on Friday, suggesting the labour market was losing momentum despite the unemployment rate falling to a 16-year low of 4.3 percent. Economists polled by Reuters had predicted an increase of 185,000. market participants still expect the U.S. central bank to raise interest rates this month, many expect a more dovish course for the second half of this year.
"The pessimistic story of the jobs data should weigh on the dollar as the Fed is still expected to hike rates in June, but most market participants believe it won't hike for a long time after that, and maybe not in September or December," said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.
The dollar was nearly unchanged against the yen at 110.40 JPY= after brushing a two-week low of 110.25 earlier in the session, while the euro edged down 0.1 percent to $1.1270 EUR= after rising to a seven-month high of $1.1285.
Sterling edged down 0.2 percent to $1.2866 GBP= .
"Today and tomorrow, I am guessing that sterling will move in a range ahead of the UK election, as I think no one can accurately forecast the outcome," Murata said. "Brexit has taught us not to believe polls, and not to take aggressive positions ahead of UK events."