* Euro eases below $1.37, investors await ECB
* Dlr/yen hits 3-mth low, dragged down by cross/yen fall
* ECB seen holding rates steady, extra liquidity plan eyed
* BOE also seen keeping rates on hold, asset buying in focus
By Satomi Noguchi
TOKYO, March 4 (Reuters) - The euro eased against the dollar on Thursday ahead of a European Central Bank meeting but retained some support as investors encouraged by Greece's latest austerity measures cut some of their record short positions in the single currency.
The euro was dragged down by its fall against the yen as short-term players sold higher-yielding currencies after Asian stocks faltered and prompted investors to trim riskier positions, traders said. That move also pushed the dollar to a three-month low against the yen.
The ECB is expected to hold interest rates at a record low of 1.0 percent and outline the next steps in its gradual withdrawal from emergency lending measures.
The market focus will be on whether it announces any change to the extra liquidity it has provided for the banking system, and traders will also be listening to ECB President Jean-Claude Trichet's remarks on Greece.
"The market is now waiting to see the results of policy meetings at the ECB and the Bank of England, putting talk of the Greek debt problems on to the sidelines temporarily," said a prop trader for a Japanese trust bank.
"Whether the other euro zone countries react to offer Greece a safety net will be closely watched. But that may not become a strong focus until after U.S. jobs data," the trader said.
The pound fell against the dollar but held on to most of the previous day's rebound after a sharp fall earlier this week, ahead of a Bank of England monetary policy meeting later in the day.
The BoE is expected to keep rates unchanged, but there have been indications it is leaving the door open to more quantitative easing. Any move to expand its asset purchases could lead to the pound tumbling again, traders said.
The euro eased 0.2 percent to $1.3660, giving up some of its recovery to a two-week high of $1.3736 the previous day on trading platform EBS, from a 9-1/2-month low of $1.3433 hit earlier this week.
The pound stood at $1.5056, down 0.3 percent on the day. It was off Wednesday's high of $1.5131 hit after traders covered their short sterling positions which had sent it to a 10-month low on Monday.
But the dollar has come under pressure versus the yen on the back of comments from Federal Reserve officials that interest rates in the U.S. will stay low for a long time.
The greenback fell as far as 88.14 yen, its lowest point since early December, dragged down by falls in yen crosses and short-term speculators aiming to trigger loss-cutting orders below 88.00.
It stood at 88.30 yen, down 0.2 percent.
Traders forecast it should hold above the psychologically key 88.00 yen level unless Friday's closely watched U.S. non-farm payrolls for February are significantly below forecasts.
EURO SENTIMENT STAYS FRAGILE
Greece announced plans for a further $6.5 billion in pay cuts and tax hikes on Wednesday to reduce its deficit, easing worries about its debt crisis and helping the 10-year Greece-Germany debt spread narrow to its lowest since mid-February.
But sentiment remains fragile as investors are unsure if the package will be enough to generate additional support from bigger European Union members such as Germany and France. The European Central Bank welcomed Greece's moves ahead of its rate decision meeting later on Thursday.
"The euro has become increasingly cheap over the past few weeks relative to high-frequency valuation models. Together with extreme positioning in the euro, this weakness highlights the potential for a squeeze should the news flow around Greece turn slightly more positive," JP Morgan said in a note.
The euro has lost more than 9 percent since November when sovereign debt problems surrounding Greece and other peripheral economies in the euro zone emerged. Speculators have piled on the bad news since then, and the latest data shows they are running record high short positions against the euro.
The dollar took back a bit of ground after investors moved into higher-yielding currencies such as the Australian dollar the previous session.
The dollar index was holding at 80, with short-term support seen around the 79.60 area -- its mid-February low.
Traders have generally been trimming long positions in the dollar this week after they built up to their highest since September 2008 the week before. (Additional reporting by Kaori Kaneko in Tokyo and Anirban Nag in Sydney; Editing by Hugh Lawson)