* Euro falls sharply after ECB's Draghi's comments on deposit rates
* ECB cuts benchmark rates as expected, says policy to remain accommodative
* U.S. economic data lifts dollar versus yen
By Wanfeng Zhou
NEW YORK, May 2 (Reuters) - The euro fell sharply against the dollar in choppy trading on Thursday after European Central Bank President Mario Draghi said the bank is technically ready for negative deposit rates and noted downside risks to the economy.
Draghi's comments came after the ECB cut its benchmark refinancing rate by 25 basis points to a record low 0.5 percent, its first cut in 10 months and left the deposit rate unchanged.
"Although Draghi reiterated that the ECB was technically prepared for a cut in the deposit rate (now zero), in the past he had warned about the potential negative consequences. Now he is saying (he) has an open mind," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.
The euro fell 0.8 percent to $1.3066, having hit a session low of $1.3061, according to Reuters data.
It had risen to a session peak of $1.3215 earlier after Draghi said the central bank's monetary policy will remain accommodative for as long as needed, which boosted hopes further stimulus will help the euro zone's economy to recover.
Highlighting the fragility of economy, surveys on Thursday revealed a deepening contraction in manufacturing in April.
Against the yen, the euro fell 0.4 percent to 127.86 yen .
"Essentially, the euro was sold on Draghi's comments that they really opened the door to further easing," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.
The dollar rose 0.4 percent to 97.76 yen, having earlier risen 1 percent after data showed the number of Americans filing new claims for jobless benefits fell sharply last week to a five-year low while the U.S. trade gap narrowed in March.