FOREX-Euro sinks below $1.10; dollar index hits 11-1/2 year peak

* Euro falls below $1.10 on dovish worries

* ECB to begin bond buying next week

* Dollar index touches new highs (Adds euro's extended fall and dip under $1.10, updates prices)

By Michael Connor

NEW YORK, March 5 (Reuters) - The euro fell on Thursday below $1.10 for the first time since 2003 and the U.S. dollar added to gains against an index of currencies after the European Central Bank said it will next week launch a massive bond-buying program meant to boost economic growth.

The euro zone common currency, which has lost 15 percent against the dollar in six months, briefly traded under $1.10 for the first time since September 2003 and hit a session low of $1.0988.

It was last off 0.65 percent at $1.1005 in selling that accelerated after a news conference by ECB chief Mario Draghi.

Draghi spoke after the ECB, in its battle against euro zone economic sluggishness and low inflation, pushed up its 2015 and 2016 growth forecasts and fixed a March 9 start date for bond purchases of 60 billion euros a month.

Analysts have suggested the ECB would distort the bond market by buying bonds with negative yields. Draghi said it would only steer clear of bonds yielding less than the ECB's -0.2 percent deposit rate.

"Some people are interpreting some of the comments by Mario Draghi as very dovish for the euro," said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Ltd in New York.

Against the British pound, the euro was last off 0.2 percent at 72.34 pence after earlier touching lows last seen in December 2007.

The dollar hit a fresh 11-1/2 year high against a basket of major currencies. The dollar index rose as high as 96.593 , its strongest since September 2003, and last stood at 96.441, up 0.50 percent.

Against the yen, the dollar pushed through the 120 yen level and was last up 0.5 percent at 120.21 with traders citing buying by U.S. macro funds keen to cover short dollar positions.

Currency traders were also focused on Friday's U.S. employment report for February, when harsh winter weather in large portions of the United States may have curbed hiring, Wizman said. The labor market has been a central driver of America's relatively bright economic outlook and the dollar's rally. (Reporting by Michael Connor in New York; Editing by James Dalgleish and W Simon)