* Euro recovers after Irish bank announcement
* Dollar/yen drops to 15-year low in early global session
* Euro falls to all-time low versus Swiss franc
(Adds details, updates prices)
NEW YORK, Sept 8 (Reuters) - The euro erased losses and
rose against the dollar and the yen on Wednesday after
Ireland's finance ministry said nationalized lender Anglo Irish
Bank would be split to wind down its assets, but analysts said
markets remained wary of taking risk.
Earlier, the yen struck a 15-year high against the dollar
and the Swiss franc hit an all-time peak versus the euro as
concerns about euro zone banks and sovereign debt prompted a
flight to safety.
"Just the (Irish) announcement bought a little relief
rally" in the euro, said John McCarthy, director of foreign
exchange trading at ING Capital Markets in New York. "But
people are looking to sell the euros in substantial rallies as
issues such as sovereign debt in the euro zone have not gone
away."
The euro was up 0.5 percent at $1.2749 <EUR=>, trading
between a peak of $1.2763 and a low of $1.2660 earlier.
Concerns about how Ireland dealt with the troubled Anglo
Irish Bank [] had weighed on investors until the
announcement from the Irish government [].
The euro rose 0.6 percent to 106.95 yen <EURJPY=>, after
earlier threatening to revisit August's nine-year low just
below 105.50.
YEN WATCH
Earlier in the global trading day, persistent buying by
investors seeking a temporary refuge in the yen helped push the
greenback through a major option trigger below 83.50 yen, again
testing the Japanese authorities' pain threshold for strength
in their currency.
"Not surprisingly, more rhetoric from Japanese policymakers
has been unleashed, though the legitimacy of such talk is still
in question until we see some actual action," said Sacha
Tihanyi, currency strategist at Scotia Capital in Toronto.
Bank of Japan Governor Masaaki Shirakawa reiterated his
reluctance to return to quantitative easing although he
indicated the central bank was weighing its options. Finance
Minister Yoshihiko Noda again warned he would take decisive
action if necessary. []
"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 low as 83.34 yen on electronic trading
platform EBS <JPY=EBS> and 83.35 on Reuters data, its cheapest
since 1995, when it struck an all-time low of 79.75.
It later recovered to 83.90 yen <JPY=>, up 0.1 percent on
the day.
SWISS FRANC IN DEMAND
The euro is still below a three-week high of $1.2920 hit on
Monday on EBS <EUR=EBS>, 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. []
But the euro's early losses were limited as it found
support at the 100-day simple moving average around $1.2670.
Technical analysts saw the next support at $1.2605, the 50
percent retracement of the euro's May-to-August rally.
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 in London.
"For the euro to keep weakening, we need confirmation of
bad news, not just chatter from the local press," he said,
adding the next big risk for the euro was Hungary, which must
find a way to plug a gaping hole in its 2010 budget.
[].
The euro fell to a record low versus the Swiss franc of
1.2765 francs on EBS <EURCHF=EBS> after taking out the previous
day's record low and traders saw little chart support until
1.2700. The record low on Reuters data was 1.2766 <EURCHF=>.
The dollar fell to a nine-month low on EBS of 1.0060 francs
<CHF=EBS>. The daily low on Reuters data was 1.0063 francs.
The euro was last up 0.4 percent at 1.2878 francs and the
dollar down 0.1 percent at 1.0095 francs.
Elsewhere the Bank of Canada raised its key interest rate
by 25 basis points to 1 percent as expected but said a weak
U.S. economy would hamper Canada's recovery. [].
The U.S. dollar was last down 1.1 percent at C$1.0357.
(Reporting by Nick Olivari; Additional reporting by Neal
Armstrong in London; Editing by Andrea Ricci)
