* Dollar/yen drops to 15-year low at 83.34 yen <JPY=>
* Euro extends all-time low versus Swiss franc <EURCHF=>
* Little euro chart support until 1.2700 vs Swissie
* Market frets over euro zone banks, sovereign debt
(Adds quote, detail, updates prices)
By Neal Armstrong
LONDON, Sept 8 (Reuters) - The yen struck a fresh 15-year
high against the dollar and the Swiss franc hit an all-time peak
versus the euro on Wednesday as a flare-up in worries over euro
zone banks and sovereign debt drove investors into safe havens.
Concerns about how Ireland deals with the troubled Anglo
Irish Bank and Germany's announcement that it will not back a
euro rescue fund forever highlighted problems in weak euro zone
countries, trimming demand for risky assets.
Persistent buying by investors seeking a temporary refuge in
the yen helped push the greenback through a major option trigger
below 83.50 yen, testing the Japanese authorities' pain
threshold for strength in their currency.
"There's been an intensification in verbal rhetoric from
Japan but I don't think they will intervene here. The serious
intervention risk comes in below 80 yen," said Manuel Oliveri,
currency strategist at UBS in Zurich.
Bank of Japan Governor Masaaki Shirakawa reiterated his
reluctance to return to quantitative easing although he
indicated the central bank was weighing its options on how to
deal with the economic impact of the yen's strength.
Finance Minister Yoshihiko Noda again warned he would take
decisive action if necessary, but some in the market thought the
Japanese would struggle to make intervention effective.
[]
"The growth and changing nature of fx since the Japanese last
intervened should dampen their hopes for now. The speed of the
move will be the cue ... My fresh target for dollar/yen is now
79.50 and for euro/yen 104.50," a London trader said.
The dollar fell as far as 83.34 yen <JPY=>, down 0.5 percent
on the day and its cheapest since 1995, when it struck an
all-time low around 79.75. It later recovered towards 84.00 yen
on buying by a major European bank in thin liquidity.
The euro fell 0.5 percent to 105.80 yen <EURJPY=R> at one
point, threatening to revisit August's nine-year low just below
105.50, but recovered to 106.50 by 1125 GMT.
The euro was up slightly at $1.2718 <EUR=>, after sliding as
low as $1.2660 earlier.
SWISS FRANC IN DEMAND
The euro has dived from a three-week high of $1.2920 hit on
Monday, pressured after a newspaper report Tuesday reignited
concerns about European sovereign debt and banks' exposure.
Adding to these worries was German Chancellor Angela
Merkel's comment on Tuesday that Berlin will not support
prolonging rescue mechanisms to underpin the euro indefinitely
because it would damage the single currency. []
Ireland's cabinet was nearing a decision on how to deal with
Anglo Irish on Wednesday. []
Euro losses were limited on Wednesday as it found support at
the 100-day moving average around $1.2670. Analysts said a
significant move below $1.27 required fresh downward impetus.
"We've had a lot of negative chatter (about euro zone banks)
in the past few days, but no new, concrete news," said Peter
Frank, currency analyst at Societe Generale.
"For the euro to keep weakening, we need confirmation of bad
news, not just chatter from the local press," he said, adding
that the next big risk area for the euro was Hungary, which must
find a way to plug a gaping hold in its 2010 budget.
Technical analysts saw the next support at $1.2605, the 50
percent retracement of the euro's May-to- August rally.
The euro fell to a record low versus the Swiss franc of
1.2765 francs on electronic trading platform EBS, after taking
out the previous day's record low of 1.2812 francs, and traders
saw little chart support until 1.2700.
"There's real safe-haven demand for the Swiss, and the euro
is suffering from a shift back on to issues in the euro zone
banking sector," said Oliveri at UBS.
A Portuguese bond auction on Wednesday showed investors
remained sensitive to peripheral debt risks as they demanded an
average yield of close to 6 percent to hold 2021 Treasury Bonds,
up from 5.3 percent at the previous offering. []
(Additional reporting by Naomi Tajitsu, editing by Hugh Lawson)
