* Euro dn 1 pct vs dlr, yen; ECB Weber remarks trigger falls
* Weber: Unlimited bank lending should extend past end-2010
* Euro move accelerated after breaking key technical levels
* Dollar holds above 85 yen, investors wary of intervention
(Releads, adds quotes, updates prices)
By Tamawa Desai
LONDON, Aug 20 (Reuters) - The euro fell broadly on Friday
as comments by a senior European Central Bank official fuelled
expectations for liquidity to remain ample and investors sold
riskier assets on concerns of economic slowdown.
European Central Bank Governing Council member Axel Weber
told Bloomberg in an interview published on Friday it would be
"wise" to extend unlimited liquidity to banks past the end of
2010. []
The single currency fell to $1.2686 <EUR=>, its lowest since
mid-July. Selling gained momentum after the euro broke key
technical levels around $1.2730, with stop-loss sales triggered
on a break of that level, traders said. Some market participants
cited the euro being sold by central banks.
European stocks fell 1.0 percent at one point, as investors
pared back on riskier assets.
"It's all moving in the same direction," said Ian Stannard,
senior currency strategist at BNP Paribas. "The situation is
turning to one where weak U.S. data is becoming a positive for
the dollar as a U.S. slowdown is seen affecting a broader global
economic recovery."
By 1120 GMT, the euro was 0.9 percent lower on the day at
$1.2706 <EUR=>. Technical analysts said the market was focusing
on the $1.2646 region, around the 23.6 percent Fibonacci
retracement of the euro's slide in November 2009-June 2010.
The euro also fell more than 1.0 percent against the yen to
a 7-week low of 108.25 yen <EURJPY=R> and towards its record low
against the Swiss franc, dropping 0.6 percent to 1.3141 francs
<EURCHF=>.
DOLLAR HOLDS ABOVE 85 YEN
The dollar was a clear gainer, hitting a one-month high
against a currency basket at 83.161 <.DXY>.
It remained under pressure against the yen but managed to
hold above 85 yen <JPY=> on speculation that Japanese
authorities may take steps to stem the yen's rise.
Speculation is focused on additional easing measures by the
Bank of Japan, including expanding a funding scheme for
short-term loans.
"Markets are waiting for a meeting between the prime
minister and the Bank of Japan governor, which is feeding into
hopes that some easing measures may emerge," one London-based
trader said.
The dollar had dipped below 85 yen on Thursday after a spate
of weak U.S. data that showed a rise in new U.S. jobless claims
while a mid-Atlantic manufacturing index fell this month for the
first time in more than a year. []
Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi,
said: "The risk of unilateral intervention is rising although it
would likely prove ineffective at the current juncture," citing
Finance Minister Yoshihiko Noda's remarks on Friday his ministry
was communicating with other Group of Seven countries on
currencies. []
The high-yielding Australian dollar <AUD=D4> fell to a
one-month low of $0.8841. The currency was on the back foot on
concerns about Saturday's election, overshadowing upbeat
comments from the central bank's deputy governor.
(Additional reporting by Naomi Tajitsu; Editing by Andrew
Heavens)
