* ECB lending data cuts bets on further easing steps
* Loonie firms with Canada elections done, BOC awaited
* Kiwi hits 1-week low as milk prices slip
By Lisa Twaronite and Shinichi Saoshiro
TOKYO, Oct 21 (Reuters) - The euro firmed against the dollar and yen on Wednesday after solid euro zone data tempered prospects of the European Central Bank implementing additional stimulus before year-end.
The euro was about 0.2 percent to $1.1362 EUR= , adding to Tuesday's modest gains, after it had struck a 10-day trough of $1.1306 at the start of the week. Against the yen, the euro firmed about 0.2 percent to 136.20 EURJPY= .
The euro's upturn weighed on the U.S. dollar index against a basket of six major currencies. It dipped about 0.1 percent to 94.782 .DXY , but remained well above last week's seven-week low of 93.806.
Analysts believe the euro is still prone to volatility ahead of the ECB policy meeting on Thursday. While the ECB may not ease this month, markets remain wary of the central bank hinting at more stimulus later this year.
ECB data on Tuesday showed euro zone banks had loosened their lending standards more than expected over the last few months despite global market volatility.
That reduced the need for the ECB to ramp up its 1 trillion euro ($1.14 trillion) asset purchase programme, pushing up German bond yields and putting a floor under the recently shaky euro.
The dollar was little changed at 119.80 yen JPY= after edging up 0.3 percent overnight in range-bound trading.
Underpinning the greenback, official data out on Wednesday showed a sharp slowdown in Japan's annual export growth in September, another weak indicator keeping pressure on the Bank of Japan to further ease policy. urn:newsml:reuters.com:*:nL3N12I05T
"We don't expect the BOJ easing at the meeting next week, but some in the market are speculating that such an easing is possible, so the dollar's downside risk is limited," said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.
News U.S. housing starts rose a greater-than-expected 6.5 percent in September supporting views the U.S. Federal Reserve will opt to raise interest rates reasonably soon, supporting the dollar. urn:newsml:reuters.com:*:nL1N12K0TJ
The Canadian dollar, meanwhile, steadied after Canada's election results were announced. The dollar stood little changed from late North American levels at C$1.2976 CAD=D4 , after reaching C$1.3048 on Tuesday after Liberal leader Justin Trudeau won a shock victory.
Focus has now turned to the Bank of Canada's policy decision due later on Wednesday. Most analysts polled by Reuters see rates staying unchanged.
The New Zealand dollar was on the defensive after a fall in international milk prices at the second auction held this month by Fonterra Co-operative Group, the world's largest dairy exporter.
The kiwi traded at $0.6752 NZD=D4 after striking a 1-week low of $0.6736.
($1 = 0.8810 euros)