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FOREX-Euro falls as ECB's Draghi rings cautious note

* ECB's Draghi raises caution on inflation, protectionism

* Trump opens door on trade "flexibility" for "real friends"

* Traders await BOJ policy meeting, U.S. payrolls data

(Updates market action, changes dateline, previous LONDON) NEW YORK, March 8 (Reuters) - The euro fell on Thursday as European Central Bank President Mario Draghi, while acknowledging faster growth in Europe, said regional inflation remained subdued and rising protectionism is a risk. Draghi expressed his view on these issues at his news conference after a central bank policy meeting. It overshadowed the ECB's dropping of a long-standing pledge to increase its bond purchases if needed, a move that briefly spurred buying of the single currency. "All of which sent the euro yo-yoing as the markets ponder the very real threat of a trade war between the U.S. and the EU," said David Lamb, head of dealing at FEXCO Corporate Payments in Edinburgh. Draghi's comment on protectionism came as traders awaited details on U.S. President Donald Trump's proposed tariffs on imported steel and aluminum, which has whipped up anxiety about a global trade war. Trump was expected to sign a proclamation later Thursday or on Friday to impose a 25 percent levy on steel and a 10 percent tariff on aluminum. Trump promised earlier on Thursday to show great flexibility and cooperation toward the United States' "real friends" after a White House official said late on Wednesday that Trump was considering offering Canada and Mexico a 30-day exemption from the tariffs. The dollar, which is seen a safe haven on trade war fears, had dipped on prospects for a softening stance on the tariffs before gaining on perceived dovish remarks from Draghi. The greenback had weakened following the resignation on Tuesday of Gary Cohn, Trump's top economic adviser, who was seen as a bulwark against protectionism in the White House. The index, which tracks the greenback versus a basket of six currencies, rose 0.38 point or 0.42 percent, to 90.017. The euro was last down 0.63 percent at $1.2334. With the ECB in the rear-view mirror, traders await news from the Bank of Japan's policy meeting and the U.S. government's payrolls report for February. "We think that they will not make any changes. Inflation is ticking higher but under their target," said John Doyle, vice president of dealing and trading at Tempus Inc in Washington. On Tuesday, Bank of Japan Governor Haruhiko Kuroda said a future exit of its ultra-loose monetary policy would need to be "very gradual," tempering his remarks before lawmakers that the central bank would consider an exit if his inflation target were reached in fiscal 2019. The dollar was last up 0.03 percent, at 106.09 yen, while the euro was down 0.58 percent at 130.87 yen.

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Currency bid prices at 10:50AM (1550 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change

Session

Euro/Dollar EUR= $1.2333 $1.2412 -0.64% +2.81% +1.2446 +1.2332 Dollar/Yen JPY= 106.0700 106.0600 +0.01% -5.86% +106.2600 +105.9000 Euro/Yen EURJPY= 130.84 131.63 -0.60% -3.21% +131.9700 +130.8400 Dollar/Swiss CHF= 0.9473 0.9433 +0.42% -2.77% +0.9485 +0.9422 Sterling/Dollar GBP= 1.3828 1.3899 -0.51% +2.34% +1.3909 +1.3826 Dollar/Canadian CAD= 1.2937 1.2910 +0.21% +2.86% +1.2951 +1.2867 Australian/Doll AUD= 0.7781 0.7823 -0.54% -0.26% +0.7838 +0.7782

ar

Euro/Swiss EURCHF= 1.1685 1.1706 -0.18% -0.03% +1.1740 +1.1686 Euro/Sterling EURGBP= 0.8917 0.8926 -0.10% +0.38% +0.8957 +0.8907 NZ Dollar/Dolar NZD= 0.7245 0.7283 -0.52% +2.24% +0.7296 +0.7246 Dollar/Norway NOK= 7.8478 7.8073 +0.52% -4.38% +7.8604 +7.7991 Euro/Norway EURNOK= 9.6791 9.6916 -0.13% -1.72% +9.7288 +9.6760 Dollar/Sweden SEK= 8.2660 8.2286 -0.15% +0.78% +8.2744 +8.2145 Euro/Sweden EURSEK= 10.1967 10.2116 -0.15% +3.63% +10.2345 +10.1957

All spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX World central bank news CEN

Economic Forecasts... ECON Official rates...INT/RATE Forex Diary.......MI/DIARY Top events........M/DIARY

Diaries...........DIARY Diaries Index........IND/DIARY Press Digests.....PRESS Polls on G7 economies..SURVEY/ European markets......MARKETS/))

(Additional reporting by Tommy Wilkes, Saikat Chatterjee; editing by Andrew Heavens and Jonathan Oatis)