* Euro broadly lower after ECB flags possibility of easing
* Draghi says further euro strength will trigger policy action
* Ukraine, stocks, Chinese data in focus this week
By Ian Chua
SYDNEY, 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, 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 at 79.612.
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)
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- Mario Draghi
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