* Euro falls for 5th session as inflation slows
* UBS calls for ECB rate cut next week
* Euro/dollar implied vols jump on renewed spot weakness
LONDON, Nov 1 (Reuters) - The euro fell to a two-week low against the dollar on Friday, extending losses into a fifth straight session as slowing euro zone inflation bolstered expectations of looser monetary policy from the European Central Bank. The single currency's weakness was broad-based, as it tumbled to a near three-week low against the yen and a two-week trough against the British pound. Its losses saw renewed demand to hedge against further weakness with one-month euro/dollar implied volatilities jumping to their highest in three weeks at 7.125 percent. The euro fell to $1.3517 in European trade, its lowest since Oct. 17 and down 0.4 percent on the day. It fell 1.1 percent the previous day. The euro's latest drop accelerated after data on Thursday showed euro zone inflation fell to a four-year low of 0.7 percent in October, way under the ECB's target of just below 2 percent. "In light of those inflation numbers, we have changed our call and are now expecting the ECB to cut its main refinance rate at next week's meeting," said Geoffrey Yu, currency strategist at UBS. "While some in the market have pricing that in, quite a few are not. We recommend investors to hold short positions in the euro and add to those positions after the ECB meeting." A depressed euro zone labour market showing unemployment still at record highs in September will give the ECB another reason to consider easing policy at Thursday's meeting. That jobs report also included alarming revisions to previous months, all of which bolstered the view that an elevated currency is the last thing euro zone policymakers want. "It should mean quite a lot for the ECB that inflation fell below 1 percent. The slowdown in inflation does not seem to be over yet," said Sho Aoyama, senior market analyst at Mizuho Securities. "They know Japan's experience of deflation and that once deflation takes hold, it could take decades to get out of it." Renewed pressure on the euro saw the dollar index rise to a two-week high of 80.437, pulling further away from a nine-month trough of 78.998 plumbed a week earlier. In contrast to the euro zone, U.S. data was far more encouraging. A strong Chicago activity survey fuelled speculation the national ISM survey of manufacturing, due later on Friday, could also surprise on the upside. The upbeat data kept alive speculation the Federal Reserve may scale back stimulus at its December meeting, though many still tip March as the likeliest window for a move.