* Dollar down vs yen on uncertainty ahead of U.S. bank plan

* Euro/sterling buying boosts euro/dollar

* Geithner set to unveil bank plan outline at 1600 GMT (Updates prices, adds quotes)

By Gertrude Chavez-Dreyfuss

NEW YORK, Feb 10 (Reuters) - The dollar fell against the euro and yen on Tuesday as investors turned cautious ahead of the U.S. government's announcement of a widely anticipated plan to shore up its beleaguered banking sector.

The euro gained ground against the dollar as the European currency broke a key technical level versus sterling.

Still, the main focus remains on the U.S. plans for financial stabilisation and economic stimulus aimed at tackling the recession in the world's biggest economy.

Market participants were worried the bank rescue package, aimed at helping banks off-load their "toxic assets" and boost capital, may not be enough to ease the impact of the credit crisis. They were generally wary of making large bets before the outlines of the U.S. plan are unveiled by Treasury Secretary Timothy Geithner at 11 a.m. (1600 GMT).

The Obama administration is also waiting for Congress to work out an $800 billion-plus economic stimulus package, although a major hurdle was cleared in the Senate on Monday.

Investors are very skittish and we're waiting to see how financial markets react to the U.S. bailout plan and that's why we're seeing bids in the yen and the dollar against the euro," said Boris Schlossberg, director of GFT Forex in New York.

The low-yielding dollar and yen are typically viewed as safe-haven currencies with low volatility. When stocks drop and the risk barometer shoots up, investors repatriate funds and close out losing risky trades funded by these two currencies.

In mid-morning New York trading, the euro <EUR=> rose as high as $1.3042 versus the dollar, driven by gains in euro/sterling. It was last at $1.3029, up 0.2 percent.

The euro rose more than 1 percent to 88.19 pence <EURGBP=>.

"There was a lot of euro/sterling buying and that helped the euro/dollar overall. It's all flows-driven ahead of the announcement on the bank bailout plan," said John McCarthy, director of foreign exchange at ING Capital Markets in New York.

Yen strength pulled the dollar down 0.4 percent at 91.07 <JPY=>, while the euro fell 0.5 percent to 118.44 yen <EURJPY=>.