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FOREX-Euro off to subdued start, PMIs in focus this week

* Euro open steady after two weeks of decline

* Euro zone PMIs in focus this week

* Fed minutes, China PMI also eyed

By Ian Chua

SYDNEY, May 19 (Reuters) - The euro got off to a relatively steady start on Monday after two punishing weeks as investors waited for fresh data before deciding on whether bears still hold the upper hand.

It was little changed at $1.3696, nursing losses of over 1 percent suffered in the past two weeks. Investors had sold the common currency on mounting expectations the European Central Bank (ECB) will ease policy next month.

Five senior sources have told Reuters that the ECB is preparing a package of policy options for the June 5 meeting, including cuts in all its interest rates and targeted measures aimed at boosting lending to small- and mid-sized firms.

This means euro zone purchasing managers surveys due later in the week will be closely watched, traders said.

"Given the low euro zone inflation, interest will be on the input/output price subcomponents of the PMIs," analysts at Commonwealth Bank wrote in a note to clients.

Against the yen, the euro fetched 139.06, having reached a three-month low of 138.77 on Friday.

The other major currencies were equally subdued after an uneventful weekend.

The dollar index traded at 80.052, near where it closed last week after notching up a modest 0.2 percent gain. On the Japanese currency, the greenback fetched 101.54, not far from a two-month low of 101.31 set on Thursday.

Commodity currencies were sluggish as well with the Australian dollar just a touch firmer at $0.9366 following a flat week. Traders said the 94 U.S. cent level is still providing a cap for the Aussie for now.

The major mover in the currency market last week was the partially convertible rupee, which hit an 11-month high on Friday. It posted its best weekly rally in eight months as the Bharatiya Janata Party and its allies headed towards an overwhelming majority in India's elections.

Traders expect less fireworks in the rupee this week as investors will keep a close eye on any announcements on economic or fiscal plans from the new government.

Also in focus this week are minutes of the Federal Reserve April 29-30 policy meeting as well as a private survey on China's manufacturing sector for May.

There are no major economic data out of Asia that will likely move currencies on Monday, leaving the focus on equity market performance.

Wall Street managed to eke out a small gain on Friday, offering hope that regional bourses will open higher, an outcome that could weigh on the safe-haven yen.

(Editing by Shri Navaratnam)