* Euro rises as German industry orders jump
* Investors wary of pushing euro lower before ECB meets
* U.S. Fed's Williams urges caution on trimming stimulus
NEW YORK, Nov 6 (Reuters) - The euro gained broadly on Wednesday after stronger-than-expected German industry orders affirmed expectations the European Central Bank will not cut interest rates this week despite a steep fall in inflation.
Even so, the outlook for the euro zone's common currency has dimmed, with many market participants expecting the ECB to strike a dovish tone at Thursday's monetary policy meeting.
The euro has dropped sharply from levels above $1.38 touched before last week's data on inflation for the euro zone, which fell to the lowest level in nearly four years. The inflation numbers have fanned speculation the ECB may further ease monetary policy at some point, although Wednesday's robust German industry orders cemented views that the ECB will keep interest rates unchanged on Thursday.
Only one of 23 money market traders polled by Reuters expects a cut on Thursday.
"Our base case is that the ECB will strike a far more dovish tone on Thursday, laying the foundation for an interest rate cut and LTRO (long-term refinancing operation) at the Dec. 5th meeting," said Camilla Sutton, chief currency strategist at ScotiaBank in Toronto.
She said the risk of an ECB rate cut is real whether it comes in November or December, adding that the ECB will work hard to soften the euro and its impact on inflation. ScotiaBank sees the euro at $1.31 by the end of the year.
The euro extended gains after data showed German factory orders jumped by 3.3 percent in September, well above the 0.5 percent economists had expected.
In mid afternoon trading, the euro was up 0.3 percent at $1.3516, well above Monday's low of $1.3441.
Ruben Segura-Cayuela, European economist at Bank of America Merrill Lynch in London, said the euro is not overvalued but is close to the upper end of its equilibrium range. He said the euro zone cannot afford a stronger euro.
"The strength of the euro this year has already started offsetting the periphery's competitiveness gains, which the region achieved during a painful adjustment in recent years," Segura-Cayuela said.
The euro has gained 2.5 percent so far this year, on track for its strongest yearly performance since 2007.
Another report on Wednesday showed that euro zone private sector growth slowed less in October than previously estimated.
FED'S WILLIAM'S COMMENTS PRESSURE DOLLAR
The euro was also helped by comments from the president of the San Francisco Federal Reserve Bank, John Williams, who said late on Tuesday that the Fed should wait for stronger evidence of growth momentum before trimming bond-buying. The remarks weighed on the dollar.
But a report on Tuesday showing U.S. service-sector activity picked up in October suggested the economy may not have suffered badly from the partial U.S. government shutdown, and kept alive the prospect of the Fed scaling back stimulus in the coming months.
Carl Hammer, chief currency strategist at SEB, said he expected euro/dollar movements to be limited to within 1 or 2 cents either side of $1.35.
"An ECB rate cut would be negative for the euro because it would play into the hands of short-term speculators as the market is quite long of euros, but it would not really alter the long-term picture," Hammer said, adding that a cut would have limited effect because rates are already near zero.
The euro was up 0.5 percent against the yen while the dollar gained 0.1 percent against the Japanese currency .
Sterling earlier hit a one-week high against the dollar and a one-month peak against the euro after stronger-than-expected industrial output data.
"The outlook for the UK economy has improved notably following a string of better-than-expected economic releases," said Eric Viloria, senior currency strategist at Forex.com. "However, as expectations increase it tends to be more difficult for positive surprises to continue."