FOREX-Euro heads for worst week in 2 yrs, ECB weighed

* Dollar rally gathers steam, dlr index at 1-month high

* Euro heading for biggest weekly loss vs dlr in 2 years

* ECB rate hike outlook tempered by Stark, Lagarde

* Peripheral jitters on Irish EU reform referendum

(Changes byline, adds quotes, updates prices)

By Toni Vorobyova

LONDON, June 12 (Reuters) - The euro was on track for its worst week versus the dollar in two years on Thursday, hurt by tempered expectations of euro zone rate hikes and political jitters surrounding Ireland's referendum on EU reforms.

European Central Bank President Jean-Claude Trichet last week opened the door to a July rate hike, but policymakers since then have reiterated his message that this would not be the start of a big monetary tightening campaign.

French economy minister Christine Lagarde on Thursday went one step further, saying that the ECB may even reconsider the July move after this weekend's G8 meeting [ID:nPAB004122].

Adding pressure on the euro was news of a potential $46.3 billion outflow from euros to dollars as Belgium's InBev -- the world's largest beer producer by volume -- launched a bid for Anheuser-Busch, the U.S. maker of Budweiser and Michelob [ID:nL12592065].

Political jitters also weighed as Ireland went to the polls on a close-run referendum on European Union reform, flashing up memories of a euro sell-off in 2005 after the French and the Dutch voted "no" on the EU constitution [ID:nL11632657].

"The market is getting a few jitters over the Irish referendum...Coupled with the fact that a lot of stops accumulated around $1.5450 that started to push the euro lower," said Geoffrey Yu, currency strategist at UBS in Zurich.

"Also we had the comments from (ECB Executive Board member Juergen) Stark yesterday,...he suggested that the market may have gotten overboard in pricing in multiple ECB hikes on the back of what Trichet said. So if the yields adjust on that as well, then the euro will suffer."

By 1021 GMT, the euro was down 0.8 percent on the day at $1.5430, on track for its biggest weekly loss in percentage terms since early June 2006.

The dollar hit a one-month high versus a basket of six major currencies at 73.888 .DXY. It added 0.7 percent to 107.63 yen JPY=, nearing a four-month peak of 107.75 struck on Wednesday.

FED REASSESSED NEXT?

Although the dollar was cashing in on reduced ECB rate hike expectations, analysts said markets' Fed expectations were also looking overdone with the possibility of three rate hikes priced in by year-end FEDWTACH.

Any reassessment of how much the Fed could lift rates from 2 percent later in the year may drive the dollar lower, given the albeit tempered ECB expectations.

However, the trigger for such change of opinion is unlikely to come from Thursday's U.S. data at 1230 GMT, with retail sales are expected to rise on the month in May, while import price inflation accelerates.

"While we think the market is wrong in pricing a Fed rate hike in September, we may have to brace ourselves for a sharply higher import price figure today, which may temporarily fan fears of Fed tightening and send U.S. yields and the dollar higher again," ING said in a research note.

A note of caution on the dollar, though, may come from weekly jobless claims, where the number of people remaining on benefit is expected to rise to a four-year high of 3.12 million.