* Euro falls sharply, hurt by ECB deposit rate cut

* Dollar up vs yen on White House auto aid plan

* Dollar draws support from BoJ rate cut to 0.1 percent (Adds comments, updates prices, changes byline, dateline; previous LONDON)

By Wanfeng Zhou

NEW YORK, Dec 19 (Reuters) - The U.S. dollar rallied against the euro on Friday, extending gains stemming from Thursday's European Central Bank's deposit rates cut, which eroded the appeal of the euro zone currency.

The dollar also gained versus the yen after the White House said it will provide loans to struggling U.S. automakers. The greenback earlier drew support from the Japanese central bank cutting interest rates to nearly zero.

The euro fell below $1.40 as traders also reckoned that its broad surge earlier this week may have been overdone. Despite the ECB move, the euro is on track post a weekly gain of over 4 percent against the dollar.

"The driver was the ECB's move to cut its deposit rate yesterday...to discourage banks from depositing money with the ECB and to encourage them to rather lend them," said Ronald Simpson, managing director of global currency analysis at Action Economics, in Tampa, Florida.

"What this ECB move did was, for all intents and purposes, it knocked down the euro's interest rate advantage versus the U.S. So it made it less attractive to hold euros."