FOREX-Euro down on month-end flows, Greek headlines inject volatility

(Adds details, fresh quote)

* Euro broadly lower

* Focus on Greek referendum on Sunday

* Euro sees choppiness on hopes of a last-minute deal

By Anirban Nag

LONDON, June 30 (Reuters) - The euro fell on Tuesday on month-end flows and as investors braced for the near certainty that Greece will default on a repayment to the International Monetary Fund later in the day, putting the country at risk of an exit from the euro zone.

The euro shed 0.4 percent to $1.1190 as hedge funds stepped up sales. The currency had hit a four-week low of $1.0955 on Monday in reaction to concerns on the future of Greece and the euro zone. It fell more than 1 percent against the yen, before recovering to trade at 136.86 yen, though still down 0.6 percent on the day.

In the European session, the euro drew support from a drop in Italian and Spanish bond yields after a report that said Greek Prime Minister Alexis Tsipras was considering a last minute aid proposal by the head of the European Commission.

Still, barring an eleventh-hour deal, a default looked inevitable. Crucially, investors would wait to see whether the European Central Bank will continue providing emergency liquidity assistance to Greece.

The focus was also on how popular opinion takes shape in Greece before the country holds a referendum on Sunday to vote on whether the terms set by creditors for a bailout were acceptable.

"Month-end and quarter-end flows are positive for the dollar and most investors are waiting to see how the Greek referendum pans out and what the opinion polls are indicating," said Yujiro Goto, currency strategist at Nomura. "Medium term we are still short euro against the dollar."

Month- and quarter-end flows stem from global fund managers and investors rebalancing their currency exposure based on stock and bond market movements over the month or the quarter.

Traders said it may be unwise to read too much into moves driven mainly by these flows, with most staying to the sidelines to see how the Greek crisis pans out.

Some investors are harbouring hopes that Greeks will give their assent to the bailout terms, sending their government back to the negotiating table.

Even (Taiwan OTC: 6436.TWO - news) that scenario is fraught with uncertainty as Tsipras suggested on Monday that he would resign if Greek voters accept a reform-for-aid deal that he had rejected.

In a sign traders are expecting wild swings in coming days, implied volatility on one-week euro/dollar options rose further to around 18 percent from 16.5 percent late on Monday.

"We expect headline news to drive euro/crosses this week and volatility remaining elevated," ING said in a note, adding that the euro's upside would remain limited.

(Additional reporting by Hideyuki Sano; Editing by mark Heinrich)