* Dollar bogged down as U.S. 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
* Brazilian real slides, Turkey's rate hike draws attention (Adds details and quotes, updates prices)
By Shinichi Saoshiro
TOKYO, June 8 (Reuters) - The dollar wallowed near a three-week low against its peers on Friday as U.S. Treasury yields fell sharply, while the euro's recovery remained intact amid expectations the European Central Bank will begin unwinding its stimulus programme.
The dollar index versus a basket of six major currencies .DXY was little changed at 93.467 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 the ECB could signal intentions to start unwinding its massive bond purchasing programme when it holds a policy meeting on June 14.
The euro was flat at $1.1797 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 market.
"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."
The Fed holds a two-day meeting starting on June 12, at which it is widely expected to raise interest rates for the second time this year. The focus is on whether the central bank will hint at raising rates a total of four times in 2018.
President Donald Trump is set to meet North Korean leader Kim Jong Un in Singapore on June 12. The main issue for the summit is the U.S. demand for North Korea to abandon a nuclear weapons programme 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 be in the spotlight.
The dollar was steady at 109.710 yen JPY= after losing 0.45 percent overnight.
The pound was little changed at $1.3415 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 dipped 0.2 percent to $0.7608 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.
Elsewhere, emerging market currencies drew attention after the Brazilian real BRL= slumped and Turkey's central bank hiked interest rates.
Brazil's real on Thursday retreated to a two-year low on worries over the country's fiscal outlook and political future while Turkey's central bank raised rates for the second time in as many weeks. Turkish lira TRYTOM=D3 , which had retreated to a record low against the dollar late in May on political and inflation woes, gained for now after Turkey's central bank tightened policy on Thursday and said it was ready to raise rates further.
"While there are a lot of movements, it is difficult to see turbulence in the emerging markets having a major impact on currencies of developed economies, which enjoy strong fundamentals," said Koji Fukaya, president at FPG Securities in Tokyo.
"That said, safe-havens such as Treasuries have not been immune to ongoings in the emerging markets. Risk aversion stemming from these markets could yet hamper dollar gains by capping bond yields."