* ECB's Lagarde says negative rates to end soon

* Dollar drops across the board, follows selloff last week

* Swiss franc gains on hawkish comments

* Aussie rises though election reaction muted

By Sinéad Carew

NEW YORK, May 23 (Reuters) - The dollar index fell on Monday while the euro rallied after the European Central Bank indicated a move from negative interest rates, and riskier currencies gained ground along with equities.

ECB President Christine Lagarde said in a blog post that the bank was likely to lift the euro area deposit rate out of negative territory by the end of September and could raise it further if it saw inflation stabilizing at 2%.

After declining last week, U.S. equities followed European stocks higher on Monday.

The euro's rally came as the dollar fell broadly after already selling off last week.

Investors had more appetite for riskier assets on Monday as they reacted to Lagarde's comments and easing worries that a European recession was imminent while the U.S. outlook looked less inspiring, according to Erik Nelson, macro strategist at Wells Fargo, New York.

"We're seeing more optimism around global growth - European growth, Chinese growth, UK growth, and a little bit less optimism about U.S. growth. So the growth divergence theme is really a big thing and moving out of favor for the dollar," Nelson said.

The euro was the big gainer, last up 1.13% at $1.0687 EUR=EBS , having risen as much as 3.4% from its multi-year intraday low of $1.0349 on May 13.

The U.S. dollar index =USD , which had hit a two-decade high of 105.01 on May 13, was last down 0.82% at 102.09.

"Investors are still interested in the greenback, but foreign currency pressure to the upside has created a little bit of a headwind for the U.S. dollar," said JB Mackenzie, managing director of futures and forex at Charles Schwab.

In particular, Mackenzie pointed to the euro's rise after the ECB indication that it would become more hawkish.

"Everybody else has been hiking interest rates. The ECB has been the last one to do that so that was what put pressure on the euro. Now all of a sudden, you're starting to hear that they're going to be changing their policy route," Mackenzie said.

Whether the dollar is taking a breather or keeps falling will depend on news from the U.S. Federal Reserve, according to Mackenzie, who will be watching closely for policy clues in minutes from the Fed meeting, due to be released this week.

The greenback has already soared this year but with expectations for repeated rate hikes already priced in, Wells Fargo's Nelson said it may trade sideways for some time.

Last week speculators' net long positioning on the U.S. dollar slipped, after hitting their highest level since late November in the previous week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on Friday.

The Australian dollar, which initially showed a muted reaction to the victory for the center-left Labor Party in national elections at the weekend, was up 0.77% at $0.7106 AUD=D3 .

SWISS FRANC GAINS

Meanwhile the Swiss franc was gaining against the dollar after Swiss National Bank governing board member Andrea Maechler said in an interview published on Monday that the bank will tighten monetary policy if inflation in Switzerland remains persistently high. The dollar was last down 0.89% against the Swiss franc after hitting its lowest level since late April.

Sentiment around China also helped riskier currencies. Shanghai is edging out of a pandemic-related lockdown, and an unexpectedly big rate cut in China last week reassured investors. Also China will broaden its tax credit rebates, postpone social security payments and loan repayments, roll out new investment projects and take other steps to support the economy, state television quoted the Cabinet as saying on Monday.

The yuan had its best week since late 2020 last week and in offshore markets on Monday firmed to 6.704 per dollar CNH=EBS , its strongest since early May.

Geopolitics are also in focus in Asia this week as U.S. President Joe Biden tours the region.

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Currency bid prices at 3:09PM (1909 GMT) Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Dollar index

=USD

102.0900

102.9500

-0.82%

6.718%

+102.9500 +102.0400 Euro/Dollar

EUR=EBS

$1.0687

$1.0569

+1.13%

-5.99%

+$1.0697

+$1.0559 Dollar/Yen

JPY=EBS

127.9150

127.9200

-0.01%

+11.11%

+128.0550 +127.1600 Euro/Yen

EURJPY=

136.70

135.03

+1.24%

+4.90%

+136.8000 +134.6700 Dollar/Swiss

CHF=EBS

0.9660

0.9743

-0.89%

+5.85%

+0.9751

+0.9629 Sterling/Dollar GBP=D3

$1.2577

$1.2496

+0.68%

-6.98%

+$1.2601

+$1.2482 Dollar/Canadian CAD=D3

1.2774

1.2846

-0.55%

+1.04%

+1.2842

+1.2767 Aussie/Dollar

AUD=D3

$0.7106

$0.7052

+0.77%

-2.24%

+$0.7127

+$0.7046 Euro/Swiss

EURCHF=

1.0324

1.0289

+0.34%

-0.43%

+1.0335

+1.0266 Euro/Sterling

EURGBP=

0.8495

0.8457

+0.45%

+1.13%

+0.8504

+0.8434 NZ

NZD=D3

$0.6463

$0.6410

+0.84%

-5.57%

+$0.6491

+$0.6400 Dollar/Dollar

Dollar/Norway

NOK=D3

9.5905

9.7400

-1.64%

+8.75%

+9.7330

+9.5800 Euro/Norway

EURNOK=

10.2510

10.2923

-0.40%

+2.38%

+10.3123

+10.2207 Dollar/Sweden

SEK=

9.8115

9.9285

-0.13%

+8.80%

+9.9711

+9.8023 Euro/Sweden

EURSEK=

10.4850

10.4983

-0.13%

+2.45%

+10.5190

+10.4595

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FX market positions Link

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Reporting by Sinéad Carew in New York
and Tommy Wilkes in London
Additional reporting by Tom Westbrook in Singapore
Editing by Jan Harvey, Will Dunham and Matthew Lewis