* Euro hits 11-week lows versus dollar, yen
* Euro zone growth misses forecasts, inflation subdued
* Swiss franc falls to 6-week low vs euro
(Updates with Euro zone GDP data, adds fresh comments)
By Anirban Nag
LONDON, May 15 The euro extended losses to
11-week lows against the dollar and the yen on Thursday, after
subdued euro zone growth and inflation data bolstered
expectations the European Central Bank will ease policy at its
meeting next month.
The euro lost 0.4 percent to $1.36505, its lowest
since Feb. 27 and retreating further from a 2 1/2-year high of
$1.3995 struck only last week. Against the yen too, the
euro lost 0.4 percent to trade at 139.11 yen, its
lowest in 11 weeks.
The euro zone economy expanded only 0.2 percent in the first
quarter rather than the 0.4 percent expected by economists, the
EU's statistics office estimated.
"The ECB has so many options on the table for June that it
is difficult to go and buy the euro," said Ian Gunner, portfolio
manager at Altana Hard Currency Fund. "But another rate cut will
definitely not be good enough."
Reuters on Wednesday quoted sources as saying the ECB is
preparing a package of policy options for its June meeting. They
include cuts in all its interest rates, plus measures aimed at
boosting lending to small and mid-sized firms.
ECB Executive Board member Yves Mersch said on Thursday that
the central bank's toolbox included a negative rate on bank
deposits and other measures.
Dankse Bank analysts said a new round of cheap longer-term
loans to banks and a small-scale asset purchase programme could
be measures added to a rate cut. These will increase the supply
of euros and drive down the currency's value.
SWISS FRANC WEAKER
The euro rose to a six-week high against the Swiss franc
on speculation that the Swiss National Bank might lift
the floor on the euro/Swiss franc pair to 1.25 francs or perhaps
even 1.30. The SNB did not comment.
That rise would be in response to unconventional easing by
the ECB in June. As a result, the euro rose to a high of 1.2230
francs, up 0.2 percent on the day.
The dollar was flat against the yen at 101.95 yen
after losing 0.35 percent on Wednesday, tracking a fall in U.S.
Treasury yields. It fell to the day's low of 101.66 yen after a
report showed Japan's economy grew in the January-March quarter
at its fastest pace more than two years, but the decline was
"Strong economic indicators tend to be associated with
expectations of Bank of Japan foregoing further easing, so there
may have been a knee-jerk reaction," said Kyosuke Suzuki,
director of forex at Societe Generale in Tokyo.
"But there are firm bids for the dollar in the middle
101-yen range and participants are wary of that too, keeping
movements confined in range."
(Additional reporting by Shinichi Saoshiro in Tokyo; Editing by
Larry King, John Stonestreet)