FOREX-Euro tumbles after Trichet's inflation comments

* Trichet: inflation expectations remain firmly anchored

* Euro falls sharply vs dollar, sliding toward $1.3655

* Fed Chairman Bernanke's remarks awaited (Adds quote, updates prices, changes byline, dateline, previous LONDON)

By Wanfeng Zhou

NEW YORK, Feb 3 (Reuters) - The euro fell sharply on Thursday after European Central Bank President Jean-Claude Trichet said inflation expectations in the euro zone remain firmly anchored, dampening speculation of an interest-rate hike.

Trichet's comments, which came after the ECB's decision to keep interest rates at a record low 1 percent as expected, disappointed investors who had expected a more hawkish statement after recent inflation data came in above forecast.

The euro fell as low as $1.3655 on trading platform EBS , moving further away from a 12-week high of $1.3862 set on Wednesday. It last traded at $1.3666, down 1 percent on the day.

Trichet said euro zone inflation is likely to climb further and could exceed the central bank's target for most of the year but poses no threat yet to medium-term price stability. [ID:nLDE7120I5]

"The underlying message is that there is no need for a rate hike anytime soon," said Boris Schlossberg, director of currency research at GFT in New York.

Expectations that the ECB would raise interest rates ahead of the U.S. Federal Reserve had boosted the euro against the dollar in recent weeks.

The spread between German and U.S. two-year bond yields narrowed to around 69 basis points after Trichet's comments from around 75 basis points before the press conference.

Against the yen, the euro lost 0.7 percent to 111.80 yen .

Some traders said the euro could rebound if Federal Reserve Chairman Ben Bernanke, who is due to speak at 12:30 p.m. (1730 GMT), reaffirms the Fed's focus on boosting growth, which could reignite talk the ECB could tighten monetary policy ahead of the Fed.

Losses in the euro pushed the dollar index <.DXY>, which tracks the greenback versus a basket of currencies, up 0.6 percent at 77.624, above a 12-week low of 76.881.

Stephan Maier, currency strategist at Unicredit, said investors may be taking a more neutral position on the dollar after its hefty losses earlier in the week, given the political turmoil in Egypt and the risks of unrest spreading to other Middle East countries.

Against the yen, the dollar rose 0.3 percent to 81.78 . (Additional reporting by Nick Olivari; Editing by Chizu Nomiyama)