* Dollar weighed as US yields slide on cooling risk appetite
* Markets cautious ahead of G7, US-North Korea summit, Fed and ECB
* Euro headed for biggest weekly gain since mid-February
By Shinichi Saoshiro
TOKYO, June 8 (Reuters) - The dollar wallowed near a three-week low against peers on Friday as U.S. Treasury yields fell sharply, while the euro's recovery remained intact amid expectations that the European Central Bank would begin unwinding it stimulus programme.
The dollar index versus a basket of six major currencies .DXY was little changed at 93.444 after declining 0.3 percent overnight, when it posted its fourth session of losses.
The index has fallen 0.75 percent this week, and plumbed 93.213 on Thursday, its lowest since May 17.
The dollar has come under pressure this week as the euro bounced back from 10-month lows thanks to an ebb in Italian political concerns and speculation that an ECB could signal intentions to start unwinding its big stimulus programme when it holds a policy meeting on June 14.
The euro was effectively unchanged at $1.1796 EUR= after rising to a three-week high of $1.1840 overnight. It was up more than 1 percent on the week and was set to post its biggest weekly gain since mid-February.
The greenback was dragged further down as U.S. Treasury yields fell sharply on Thursday on the back of receding risk appetite in the broader markets.
"The latest moves in currencies are driven by developments in the bond markets. Risk aversion is taking place in such regions as Europe, which could see the ECB begin unwinding its stimulus," said Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo.
"There are also concerns towards next week's political and policy fixtures, such as the FOMC (Federal Open Market Committee) meeting and the U.S.-North Korea summit."
President Dionald Trump is set to meet North Korean leader Kim Jong Un on June 12 in Singapore. The main issue for the summit is the U.S. demand for North Korea to abandon a nuclear weapons program that now threatens the United States.
The financial markets will have a platter full of upcoming events to digest, starting with the Group of Seven summit scheduled this weekend where trade issues between the United States and its major trade partners will come into focus.
The dollar was steady at 109.765 yen JPY= after losing 0.45 percent overnight.
The pound was flat at $1.3420 GBP=D3 , having slipped to a low of $1.3368 on Thursday on worries about Brexit negotiations before pulling back on the dollar's broader weakness.
The Australian dollar was a shade lower at $0.7617 AUD=D4 , extending losses from the previous day when it was jerked back from a six-week high of $0.7677 after data showed a fall in the country's trade surplus.