* Euro broadly lower after ECB flags possibility of easing
* Dollar pulls back from lows versus yen but still shaky
* Ukraine, stocks, Chinese data in focus this week (Adds quotes, details)
By Ian Chua and Shinichi Saoshiro
SYDNEY/TOKYO, April 14 (Reuters) - The euro got off to a shaky start on Monday after the European Central Bank fired another warning shot at bullish investors and arrested the single currency’s week-long surge, saying it will be forced to ease monetary policy further if the euro 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 Asian dealings, sending the common currency down broadly.
The euro dipped 0.2 percent to $1.3850 after rising almost uninterrupted last week to gain 1.3 percent, its largest weekly gain since September.
The common currency slid 0.4 percent to 140.62 yen from levels above 141.00 and reached near one-month lows against the Swiss franc at 1.2135 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 at 79.612.
Against the yen, the dollar stood little changed at 101.545 yen after easing away from last week’s trough of 101.30. But the greenback still remained firmly on the back foot after dropping 1.6 percent against the Japanese currency last week.
Market players said the dollar received a bit of reprieve on reports that Japanese Prime Minister Shinzo Abe would meet Bank of Japan Governor Haruhiko Kuroda during the month, which helped stoke expectations for further monetary easing by the central bank.
“The reports have helped the dollar but support is likely to melt away unless the meeting actually results in concrete steps,” said Junichi Ishikawa, market analyst at IG Securities in Tokyo.
For the near term, traders expect the safe-haven yen to stay in favour given escalating tensions in the Ukraine and jitters surrounding the sell-off 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.
“Wall Street’s performance will remain a key driver for the dollar and yen. Near-term focus is on 101.20 yen. It appears significant bids for the dollar are lined up there, and a break below that level is likely to trigger significant covering of yen shorts,” Ishikawa at IG said.
A break below 101.20 yen, a low hit on March 3 when Russia was tightening its grip on Crimea, would take the dollar to a 10-week low.
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 $0.9398, 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 suggesting Beijing was not keen on any large scale stimulus even in the face of slower growth. (Editing by Jacqueline Wong)