* Sterling slips to lowest since June 2008 vs U.S. dollar * European shares steady after recent rally * Bunds edge up as focus remains on Italy By Marc Jones LONDON, March 12 (Reuters) - Sterling slipped to a 2-1/2 year low and European shares dipped on Tuesday after data underscoring Britain's economic weakness bolstered expectations of another jolt of central bank stimulus. British manufacturing output fell in January at the fastest pace since June, official data showed, reinforcing fears that Europe's second-biggest economy made a poor start to the year. The pound has been one of the worst performing major currencies in 2013, having fallen 8.5 percent against the dollar and 7.6 percent against the euro. It fell to $1.4832, its lowest since late June 2010, shortly after the data, as expectations firmed that the Bank of England would try to kickstart the economy with fresh stimulus in the coming weeks or months. Analysts say it is likely to come via 25 billion pounds worth of bond purchases a month, which increases the amount of sterling in the system, effectively lowering its value. "There are concerns on just about every front for the UK," said Neil Mellor at Bank of New York Mellon. "Political concerns, whether there will be another downgrade, the budget and whether or not we will see more monetary stimulus. Everywhere you look there is a negative." The disappointing UK data also wiped out the small gains European shares had clocked up in earlier trading. Despite hopes of more BoE stimulus nudging up London's FTSE 100, falls of 0.1 on Paris's CAC-40 and Frankfurt's DAX left the pan-European FTSEurofirst 300 virtually unchanged on the day. Wall Street stock futures also pointed to a possible end to its run of seven straight days of gains. STRETCHED YEN The yen is another major currency to have come under pressure in recent months due to the prospect of aggressive easing from a new leadership team at the Bank of Japan. Having hit a fresh 3-1/2-year low of 96.71 in Asian trading after reports new BOJ governor Haruhiko Kuroda may take easing steps swiftly after he takes office next week, some morning buying saw it rebound to 95.71 yen versus the dollar. "I think if the reports of an emergency (BoJ) meeting are true and we do get some earlier-than-expected easing, we will see one final round of yen weakness, but then that will be it," said John Hardy, head of FX strategy at Saxo bank. "When these trends get big in the market they can become really dominant, but it (the yen's fall) now looks stretched." In the bond market the balance between risk appetite and aversion was balanced. Italian government bonds were up slightly on the day, having shrugged off some early weakness, while German bonds were also higher. With much of the focus still on the euro zone's debt worries, Germany's Bundesbank chief Jens Weidmann sent a fresh warning that the crisis was not over and that France's reform drive seemed to have run into the sand. COMMODITY DRIFT The recent rise of the dollar and questions over broader demand trends continued to weigh on commodity markets. Most of the world's raw materials are bought and sold in dollars, so its movements can have a strong influence on prices. Growth-attuned metals such as copper and platinum both drifted lower, while gold, which is down around 10 percent since October, inched up to $1,584.7 an ounce. Oil prices saw one of the more pronounced moves, falling back below $110 a barrel as the prospect of slower demand growth in China and high stocks of crude in the world's biggest consumer, the United States, triggered selling. "China's demand will tick along at about 5 percent growth per annum," a Singapore-based trader with a Western firm said. "That is not a very large increase because it used to grow over 10 percent in the past."