* Euro nurses losses after biggest weekly drop in over ayear
* ECB meeting on Thursday key for common currency
* Aussie dollar eyes data dump, ahead of RBA meeting Tuesday
By Ian Chua
SYDNEY, Nov 4 (Reuters) - The euro languished at two-weeklows early in Asia on Monday, having suffered its biggest dropin over a year last week as expectations grew the EuropeanCentral Bank will be forced to cut interest rates to shore upgrowth.
After data last week showed a plunge in euro area inflation,a growing number of analysts including UBS and RBS reckon a ratecut could come as soon as Thursday's policy meeting.
The euro last traded at $1.3490, not far off Friday'strough of $1.3478. It skidded 2.3 percent last week to testchart support around $1.3460/80, a level that has held sincelate September.
"Although market expectations for ECB action have grown dueto the weak inflation print, we think a December move is muchmore likely," analysts at Barclays Capital wrote in a note,adding an unchanged rate setting on Thursday could lead to aknee-jerk bounce in the euro.
"However, we expect dovish rhetoric at the press conferencefrom ECB President Mario Draghi to keep a December move in play.We would therefore recommend using any EUR rally as a betterentry level to re-engage in EUR/USD downside."
Against the yen, the common currency was at 133.25, having fallen as far as 132.60 last week, its lowestin three weeks.
Pressure on the euro helped keep the dollar at six-weekhighs against a basket of major currencies. The dollar index was steady at 80.703, close to Friday's peak of80.785.
The dollar was little changed against the yen at 98.68, within easy reach of a three-week high of 98.86 set onFriday.
Commodity currencies failed to gain traction against thebuoyant dollar even after upbeat data out of China over theweekend.
Data on Sunday showed activity in China's services sectorexpanded at the fastest pace in 13 months in October, offeringfurther indications that the world's No. 2 economy hasstabilised.
The Australian dollar traded at $0.9448, strugglingto pull away from Friday's three-week trough of $0.9421. TheAussie's immediate fortunes hinge on a string of economic datadue at 0030 GMT, including retail sales.
The batch of data comes a day before the Reserve Bank ofAustralia holds its policy meeting. All 23 analysts polled byReuters on Friday expect the RBA to keep its cash rate unchangedat a record low 2.5 percent.
Trading is likely to be subdued in Asia on Monday withJapanese financial markets shut for a public holiday.
- European Central Bank