* BOJ easing expectations keep hammering yen
* Euro steady ahead of ECB meeting on Thursday
* ECB seen holding rates steady
By Anooja Debnath
LONDON, Jan 10 (Reuters) - The dollar neared a 2-1/2-year high against the yen on Thursday, with the Japanese currency looking susceptible to further losses on increasing bets of easier policy by the country's central bank.
While the European Central Bank is widely expected to keep rates on hold, when it meets later on Thursday, the euro was seen vulnerable against the dollar, as some traders positioned themselves for a risk of a rate cut.
The dollar was up 0.5 percent on the day against the yen at 88.30 yen, not far from 88.48 yen hit Friday, its highest level since July 2010. The yen gave up most of its gains earlier this week.
"We can definitely see the trend of yen weakness continue," said Peter Kinsella, currency strategist at Commerzbank.
"Data for China last night was very good and that was good for risk in general and bad for safe-haven currencies, like the yen, which weakened on the back of that. The BOJ increasing its inflation target poses a further risk to the yen."
China's export growth showed a surprisingly sharp rebound in December to a seven-month high, which saw growth-linked currencies such as the Australian dollar hit a three-week high against the dollar at $1.0568.
The euro was up 0.4 percent against the yen at 115.27 yen. The euro is expected to climb slightly if the ECB maintains status quo on policy.
Traders reported a high demand for options betting on further yen weakness, with one-month dollar/yen implied volatility - a measure of expected price movement - rising to its highest since March 2012.
One-month risk reversals showed demand to buy yen puts - or bets on the yen falling - rising sharply to 0.95, up from around 0.4 at the start of the week.
Yen moves will likely be volatile ahead of the BOJ's Jan. 21-22 policy meeting, as seen in the yen's roughly 1.2 percent rebound from that low earlier this week.
"Short-term players will likely take profits as soon as the yen stops falling," said Teppei Ino, currency strategist at the Bank of Tokyo-Mitsubishi UFJ. "But then again, there's also chance that expectations of BOJ easing could keep the yen under pressure until the bank's policy meeting."
The BOJ is widely expected to heed Prime Minister Shinzo Abe's call for adopting a 2 percent inflation target at its next policy meeting.
Further signs of recovery in China failed to lift the risk-sensitive euro against the dollar, as traders focused on the ECB meeting.
Against the dollar, the euro was flat on the day at $1.3066. Reported bids from Asian central banks at $1.3040 were likely to limit any falls in the euro. Chart support was expected near $1.2995, its 50 and 55-day moving average.
"The euro has struggled to sustain any rallies past $1.30-$1.40 in the past few weeks. With economic data out of the euro zone not looking good, it is difficult to construct a bullish story for the euro," Commerzbank's Kinsella said.
The ECB is expected to keep interest rates on hold at its first policy meeting of the year on Thursday, but some market players think the bank may cut them some time in coming months and that the bank's chief, Mario Draghi, may drop hints of that in his news conference at 1330 GMT.
Traders said the market has already priced in some chance of Draghi hinting at a rate cut down the road. If he doesn't, the euro could be seen edging up.