(New throughout after sterling falls on PMI results)
* Pound falls almost 1 percent after drop in PMI indexes
* Surveys hint that economy flipping into contraction
* Yen inches down as minds shift to BOJ meeting next week
* Euro little changed after ECB meeting
By Patrick Graham
LONDON, July 22 (Reuters) - Surveys that suggested the UK economy may start to contract in quarterly terms after last month's Brexit vote dominated trade on major currency markets on Friday, knocking almost 1 percent off sterling across the board.
The yen also weakened, weighed down by expectations that next week's Bank of Japan meeting will unveil further money-printing initiatives, despite a number of reports suggesting the bank's view on the economy had not worsened that dramatically.
That helped the dollar to a minimal gain on the day, putting it on track for its fifth weekly rise on the trot, in part a reflection of the latest recovery in expectations for a rise in U.S. interest rates this year.
More generally, it has been a week of minimal moves in the major pairs amid a handful of signals that the European Central Bank and the Bank of England may be less gung ho than previously thought in reducing interest rates further.
Analysts wonder if the PMI numbers on Friday may mark the start of the more decisive turn against sterling - and a cut next month in BoE interest rates - predicted by many banks since the vote to leave the European Union.
"Warning signs were already apparent yesterday with the decline in retail sales," said David Cheetham, a market analyst from online broker XTB.
"But the severity of the drop in manufacturing and services PMIs combined with the fact that this is the first data that focuses solely on the post-referendum economy accentuates its importance."
The pound, up before the Purchasing Managers' Index data, flipped to stand 0.8 percent down on the day at $1.3120 and 83.95 pence per euro respectively. GBP= EURGBP=
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The yen recovered on Thursday from six-week lows above 107 per dollar after BOJ Governor Haruhiko Kuroda dented speculation it may be preparing a radical "helicopter money" economic stimulus.
But that has not shifted many investors' conviction that the BOJ will deliver some form of new stimulus next week and French bank BNP Paribas (PA:BNPP) issued a recommendation to sell the yen while also sounding downbeat on the euro's near-term prospects.
"We now expect the euro to trade down to $1.07 by the end of the third quarter, while we expect the dollar to reach 111 yen, with Fed hikes contrasting with ECB and BOJ easing to drive USD gains," the bank's London-based FX strategy team said in a note.
"This (yen) trade should benefit from three key events: BOJ easing, Japanese fiscal easing and a September Fed rate hike."
Having bounced back to as strong as 105.88 yen per dollar in Asian time JPY= , the yen fell 0.4 percent to 106.21.
The dollar was steadier against other major currencies. Flash PMI surveys in the euro zone were the latest to sound more upbeat on the economic fallout of the Brexit vote there.
"It's all about the PMIs this morning," said Kamal Sharma, a strategist with Bank of America Merrill Lynch (NYSE:BAC) in London.
"There's a lot of post-Brexit data coming out in the next couple of weeks. But the inability of the pound to rise tells you that the market is very comfortable selling any rallies at the moment." (Editing by Dale Hudson)