* Euro broadly lower after ECB flags possibility of easing
* Draghi says further euro strength will trigger policy
* Ukraine, stocks, Chinese data in focus this week
By Ian Chua
SYDNEY, April 14 The euro got off to a shaky
start on Monday after the European Central Bank fired another
warning shot at bullish investors, saying it will be forced to
ease monetary policy further if the currency keeps going up.
In the clearest signal yet that he was unhappy with the
direction of the currency, ECB President Mario Draghi on
Saturday told a news conference that "a further strengthening of
the exchange rate would require further stimulus."
ECB policy member Christian Noyer hammered home the message
on Monday saying: "The stronger the euro is, the more
accommodative policy is needed".
Investors took heed in early Asian dealings, sending the
common currency down broadly.
It slipped as far as $1.3830 from $1.3885 late in New
York on Friday, pulling further away from a 2-1/2 year peak of
$1.3967 scaled last month. The euro was last at $1.3847.
The common currency slid to 140.51 yen from
levels above 141.00 and reached near one-month lows against the
Swiss franc at 1.2147 francs.
Further weighing on the euro, Ukraine gave pro-Russian
separatists a Monday morning deadline to disarm or face a
"full-scale anti-terrorist operation" by its armed forces,
raising the risk of a military confrontation with Moscow.
"Draghi and the situation in Ukraine are going to keep the
euro heavy," said Greg Gibbs, strategist at RBS in Singapore.
"But the reaction is pretty muted given the strength of
Draghi's comments on the weekend."
Gibbs said while the market thinks further ECB stimulus is
inevitable, other factors such as solid demand for peripheral
euro zone debt were underpinning the euro for now.
The latest setback in the common currency helped lift the
dollar index, pushing it further away from a three-week
trough plumbed last Thursday. The index was last up 0.2 percent
Against the yen, the dollar was a touch softer at 101.50 yen
, having dropped 1.6 percent last week.
Traders expect the safe-haven yen to stay in favour given
current jitters surrounding the selloff in technology stocks.
On Friday, the Nasdaq closed below the 4,000 mark
for the first time since February as investors turned sour on
biotech and momentum stocks.
Commodity currencies, usually sold off in times of market
stress, appeared to be holding up quite well so far. The
Australian dollar last traded at $0.9386, having last
week peaked at a five-month high of $0.9461.
Key this week for the Aussie and risk appetite in general is
a batch of Chinese data due on Wednesday including industrial
output, retail sales and growth data.
Further signs of weakness in the world's second-biggest
economy could hit sentiment given recent commentary suggested
Beijing was not keen on any large scale stimulus even in the
face of slower growth.
(Editing by Richard Pullin)