FOREX-Euro and yen strengthens, dollar eases as central banks hold rates

* Euro gains after ECB holds rates

* Dollar eases against peers

* Japanese yen strengthens after BOJ

* British sterling rises after BOE decision (New throughout, updates prices, adds comment)

By Chibuike Oguh and Sophie Kiderlin

NEW YORK/LONDON, March 19 (Reuters) - The Japanese yen and the euro gained while the dollar eased against peers on Thursday as key central banks kept interest rates steady amid concerns about inflation from rising oil prices in the wake of the Middle East conflict. The European Central Bank left interest rates unchanged as expected but signalled it was closely watching growth and inflation risks from surging oil prices. The euro was up 0.63% against the dollar at $1.15225. The Bank of Japan held interest rates steady but maintained its bias for tighter monetary policy. The yen was up 1% against the greenback to 158.14 per dollar. The Bank of England voted unanimously to keep borrowing costs on hold in the face of inflation risks from the war in the Middle East. Sterling strengthened 0.82% to $1.3368.

"Every central banker in the world is looking at the inflation effects, the likely output effects and asking themselves how much credibility do I have?" said Steve Englander, global head of G10 FX research at Standard Chartered in New York. The Federal Reserve had held interest rates steady on Wednesday and projected higher inflation, steady unemployment and a single reduction in borrowing costs this year.

The U.S. dollar index, which measures the greenback's strength against a basket of six currencies, was last down 0.55% to 99.62.

The index is still near its 10-month high reached late last week as the conflict and rising oil prices drove investors into safe-haven U.S. assets.

"The Fed was pretty confident and Powell was resolutely on the fence, saying he's going to wait-and-see what the true impact of the war is likely to be. Now you look at other central banks, Canada was sort of neutral and the BoE, which was hawkish. The market sees more inflation risk in the UK than they do in the U.S., possibly because the UK is an energy importer and the economy is less flexible," Englander said.

Oil prices jumped above $110 a barrel after Iran attacked energy facilities across the Middle East following Israel's strike on its South Pars gas field, a major escalation in the war. Brent crude futures were up 3.6% to $111.15.

The Swiss franc, meanwhile, weakened after the Swiss National Bank kept rates unchanged and signalled a readiness to intervene to curb a recent surge in the currency.

The euro was last close to 0.34% higher to 0.91160 against the franc. Against the Swiss franc, the dollar weakened 0.06% to 0.792. The Australian dollar edged up 0.16% to $0.7034 after data for February showed unemployment ticked higher to 4.3%, slightly above market estimates. The Reserve Bank of Australia on Thursday warned the conflict in the Middle East was a material risk to the domestic economy. In cryptocurrencies, bitcoin fell 2.69% to $69,320.42. Ethereum declined 3.1% to $2,120.45.

(Reporting by Chibuike Oguh in New York, Editing by Franklin Paul)