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GLOBAL MARKETS-Euro, peripheral bond yields fall on ECB easing debate

LONDON, March 27 (Reuters) - The euro fell on Thursday and peripheral European government bond yields hit their lowest levels in years as speculation grew that the European Central Bank may ease monetary policy soon.

Emerging market stocks edged higher and Ukraine's sovereign government bonds rose after the International Monetary Fund said it had agreed a $14-18 billion bailout for the country.

European shares fell, tracking Wall Street lower, but the focus in other European markets was on whether the euro zone's central bank might act to bolster the economy.

ECB Governing Council member and Bundesbank chief Jens Weidmann said earlier this week negative interest rates were an option to temper euro strength and buying loans and other assets from banks to support the bloc was not out of the question.

His comments surprised investors given the German central bank's long-held resistance to quantitative easing. ECB President Mario Draghi said on the same day that the bank stood ready to act if inflation slipped lower than it expected.

"(The falls in yields are) driven by the latest ECB comments," ING rate strategist Alessandro Giansanti said.

Since the start of the year high-yielding peripheral bonds have outperformed benchmark German bunds and U.S. Treasuries.

"Investors are still hunting for yield and on top of that we see improving economic growth (in the periphery), reduced political risk in Italy, expectations of Portugal moving out of its bailout," he said.

The euro fell 0.15 percent to $1.3759 while it lost slightly more against the yen to 140.33. The dollar was broadly firmer.

Spanish 10-year yields hit a new eight-year low of 3.271 percent, Italian yields a new 8-1/2 year low of 3.327 percent, while Portuguese yields a new four-year low of 4.091 percent. All of these countries were seen at the leading edge of the euro zone debt crisis before the region's fortunes began to improve.

Italy's 10-year government bonds were the biggest performing asset so far this year after gold and commodities (http://link.reuters.com/pat75v)

MSCI world equity index fell 0.1 percent, driven by European stocks which were down about 0.3 percent.

Technology shares sharply fell on Wall Street, led by Facebook and King Digital Entertainment, the maker of the wildly popular "Candy Crush Saga" game.

King's stock fell 15.6 percent to close at $19 in its trading debut on Wednesday after the initial public offering valued the company at about $6 billion.

Emerging stocks nudged higher after the IMF's deal for Ukraine, which was widely expected, was announced.

The IMF hopes the aid package will unlock further credits to reach a total of $27 billion over the next two years, helping Ukraine meet debt payments after the upheaval which culminated in Russia annexing the Crimea region.

Ukraine's sovereign government bonds rose 1-2 cents on the dollar.

U.S. crude oil fell 0.15 percent to $100.09 a barrel.

(Additional reporting by Marius Zaharia; Editing by Toby Chopra)