FOREX-Dollar flat after report Trump wants to penalize currency manipulators

* Trump admin seeking ways to penalize currency manipulators

* Dollar index falls from 9-day high

* Sterling hits session high after report (Updates to U.S. market open; changes dateline; previous LONDON)

By Dion Rabouin

NEW YORK, March 30 (Reuters) - The dollar turned flat on Thursday following reports that the administration of U.S. President Donald Trump was studying ways to "penalize currency manipulators" in an effort to fulfill a campaign trail pledge.

According to CNBC, the Trump administration is "assessing the scope of its power to penalize countries whose currencies it believes are undervalued." The report provided no detail about how the administration would do this.

Trump promised to label China a currency manipulator on his first day as president, but has so far taken no action.

The dollar index, which tracks the greenback against six major currencies, erased its gains for the day after the report, falling from a 9-day high. The index was last at 100.11.

Analysts said the report was the major driver to push the dollar from its highs, along with month-end flows and some technical positioning.

The British pound gained strongly against the dollar after the report, rising 0.7 percent to a session high of $1.2525. The dollar fell to its lows of the day against the Swiss franc, dropping to 0.995 franc.

"This is really just a bit more jawboning from the (Trump) administration and them trying to move the dollar in the direction that they want it to go," said Mark McCormick, North American head of FX strategy at TD Securities.

"That’s been their operating mandate. They believe the dollar is too strong." (Reporting by Dion Rabouin; Editing by Dan Grebler)