* German Ifo survey falls short of expectations
* Euro hits near three-week low versus dollar
* Dollar still hovering within sight of 100 yen mark
By Nia Williams
LONDON, April 24 (Reuters) - The euro hit a near three-week low against the dollar on Wednesday and looked vulnerable to further losses after weak German data fanned speculation the European Central Bank would cut interest rates.
A survey by Germany's Ifo think-tank showed business morale dropped for a second month in April, fuelling concerns about the health of the euro zone's largest economy.
The survey knocked the euro lower, with the single currency already vulnerable after German PMI data on Tuesday showed a sharp drop in business activity in April.
Investors focused on the possibility of a cut in the main ECB refinancing rate, which stands at a record low 0.75 percent.
Recent comments by ECB policymakers have stressed falling inflation and poor euro zone growth prospects, suggesting policymakers are leaning towards a further cut at their next meeting on May 2.
"Already the PMI yesterday had given an impulse to the downside (to sell the euro) but some were waiting for the Ifo to confirm the economy is not really recovering," said Carolin Hecht, currency strategist at Commerzbank.
"Everyone is now really betting on the ECB to come to the stage and cut the key rate."
The euro dropped as low as $1.2954, its lowest level since April 5, before paring losses to last trade down 0.2 percent on the day at $1.2980.
Hecht said there would be support for the euro around $1.2950 and the 200-day moving average at $1.2940, but it could slide as low as $1.28 in the run-up to the ECB meeting.
However, Mitul Kotecha, Hong Kong-based head of global foreign exchange strategy for Credit Agricole, said euro losses may be limited as many traders had already priced in the possibility of an ECB rate cut to some degree.
"Markets have moved around to the view that the ECB will cut rates. We're looking for a cut in May. So to some extent the euro is pricing that in," Kotecha said.
100 YEN IN SIGHT
The euro edged down 0.1 percent to 129.16 yen, well off a more than three-year high of 131.10 yen hit earlier this month.
The dollar was steady at 99.50 yen, having pulled back from the day's high of 99.77 yen.
A trader for a Japanese bank in Bangkok said yen-buying by options players, institutional investors and Japanese exporters blocked the dollar's earlier rise.
Many traders are braced for a test of the 100 yen mark in coming days, although offers were reported around 99.80-85 yen that could limit the dollar's gains in the short-term.
The dollar hit a four-year high of 99.95 yen on April 11 after the Bank of Japan unveiled a sweeping monetary stimulus programme.
The Australian dollar fell 0.15 percent to US$1.0275 , coming under pressure after weaker-than-expected inflation data encouraged investors to bet on a further cut in Australian interest rates.
The New Zealand dollar found support after the Reserve Bank of New Zealand left interest rates at a record low 2.5 percent and said they would stay there for the rest of the year.
The New Zealand dollar rose 0.8 percent on the day to US$0.8462, pulling away from Tuesday's three-week low of US$0.8360.