* Euro gains after ECB holds rates

* Dollar eases against peers

* Japanese yen strengthens after BOJ holds rates

* British sterling rises after BOE decision

(Updates headline and prices throughout, adds analyst comment

and oil settlement)

By Chibuike Oguh and Sophie Kiderlin

NEW YORK/LONDON, March 19 (Reuters) - The euro and the

Japanese yen advanced against the U.S. dollar on Thursday as key

central banks kept interest rates steady amid concerns about

inflation from rising oil prices in the midst 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

1.18% against the dollar at $1.1585.

The Bank of Japan held interest rates steady but maintained

its bias for tighter monetary policy. The yen was up 1.4%

against the greenback to 157.61 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 1.4% to $1.34360.

"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 also 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 1% to

99.20.

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 gained 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 rose 1.18% to settle at $108.65.

AUSTRALIA BUCKS RATE HOLDING TREND

The Australian dollar edged up 0.83% to $0.70810

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. Unlike other central banks, the RBA had hiked rates for

the second straight month on Tuesday.

The Swiss franc 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 0.50%

higher at 0.91285 against the franc.

Against the Swiss franc, the dollar weakened 0.63% to

0.78830.

The Bank of Canada on Wednesday kept its key policy rate on

hold, as expected. The Canadian dollar was down

0.07% versus the greenback to C$1.374 per dollar.

"None of the seven of the G10 central bank meetings over the

past two days delivered any meaningful surprises, with all seven

on hold as expected (and the RBA hiking earlier in the week,

also as expected), and a clear emphasis throughout on the large

but highly uncertain potential impact from the Middle East

energy shock," said Goldman Sachs analysts led by Stuart

Jenkins, in an investor note.

"The emphasis across the meeting statements and guidance

generally leaned more toward emphasizing the upside risks to

inflation, rather than downside risks to growth, but with

substantial differentiation across the central banks."

In cryptocurrencies, bitcoin fell 1.16% to

$70,407.69. Ethereum declined 1.92% to $2,146.33.