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FOREX-Euro pressured by expectations of ECB easing, eyes recent lows

* Investors expect easing steps at Thursday's ECB meeting

* Speculators upped short bets on euro in latest week-IMM

* Aussie skids on downbeat data ahead of RBA meeting

By Anirban Nag

LONDON, June 2 (Reuters) - The euro fell against the dollar on Monday, as investors and speculators braced for further monetary stimulus from the European Central Bank this week and added to bets against the common currency.

Currency speculators increased short positioning on the euro to 16,633 contracts from 9,220 a week earlier, according to data for the week ended May 27 released by the Commodity Futures Trading Commission on Friday.

The ECB is preparing a package of policy options for its June 5 meeting that includes cuts in all its interest rates, Reuters reported last month.

The euro fell 0.1 percent to $1.3610, not far from a three-month low of $1.3586 touched on Thursday. It also fell against the British pound to 81.25 pence, with diverging monetary policy outlooks between the ECB and the Bank of England underpinning the pound.

"With market participants unwilling to be brave enough to take against-consensus euro long positions ahead of the meeting, and the potential for an upside surprise in US data, we expect euro/dollar to remain under pressure," said Petr Krpata, currency strategist at ING.

In the United States, May ISM Manufacturing data will be released later in the day and forecasts are for a reading of 55.5, up from the previous reading of 54.9. That should bolster a view that the first-quarter blip in U.S. growth was caused by extraordinary factors.

"The euro should move back closer to $1.3600 level, while the 200-day moving average of $1.3644 is now an important level to watch," ING's Krpata added.


The yen wobbled broadly as mergers-and-acquisition news raised the prospects of more outflows, and strong China data whetted investors' risk appetite and decreased the appeal of the safe-haven currency.

"The yen-selling trend has strengthened today, partly due to the morning's Dai-ichi news, as well as the weekend China PMI data," said Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank.

Japanese insurer Dai-ichi Life Co is in advanced talks to buy U.S. insurer Protective Life Corp in a deal that could be worth over $5 billion.

On Sunday, China's official data showed factory activity expanded at its quickest pace in five months in May, underscoring Chinese economy's solid improvement in the second quarter.

The dollar bought 101.95 yen, up about 0.2 percent. Even the euro was a touch firmer at 138.77 yen.

The Aussie skidded about 0.6 percent to $0.9250 after Australian building approvals unexpectedly fell in April, reinforcing expectations that the Reserve Bank of Australia will hold its cash rate at a record low of 2.5 percent on Tuesday.

(Additional reporting by Lisa Twaronite in TOKYO; Editing by Toby Chopra)