* Swiss franc up as euro, dollar longs liquidated
* Pakistan coup rumour fuels Swissie move, rumour denied
* Cross/yen falls but recovers on investor short-covering
* Dollar falls versus yen and euro in whippy market
By Kaori Kaneko
TOKYO, Dec 18 (Reuters) - The Swiss franc rose on Friday as
investors unwound long euro positions in the approach to the
year-end, helped by rumours of a coup in Pakistan that were
quickly denied and by stop-loss orders which propelled it up.
In turbulence that also sent the dollar and other currencies
down against the low-yielding yen, the euro fell to 1.4910
francs, its weakest level since March when the Swiss National
Bank intervened to sell francs after announcing steps to fight
deflation.
The dollar remained under pressure but the euro later
recovered to stand just 0.3 percent lower on the day at 1.4968
francs <EURCHF=R>, with traders edgy the central bank might opt
to intervene later to bring it above the 1.50 francs threshold.
The yen also later gave up the steepest of its gains on
crosses such as the Australian dollar perceived as riskier
trades, which have also been hit against the dollar this week as
investors close out long positions for the year.
"I get the impression that market players are not wasting
time to clean up their positions as we have only a few more
days," a hedge fund sales trader for a Japanese bank said.
"Today's move in euro/Swiss, dollar/yen and cross/yen are all
part of that last-minute liquidation."
The Swiss franc had gained on Thursday after a one-year
tender by the European Central Bank, as banks in the eurozone
sold euros to buy francs for Swiss franc-denominated loans.
[]
Yen crosses fell in early trade as a weak day on Wall Street
set the market up for closing out riskier positions. Talk of a
coup in Pakistan fuelled that sentiment, helping send the euro
even lower and triggering sell orders below 1.50 francs.
A spokesman for Pakistani President Asif Ali Zardari
dismissed the coup rumours that started after a government
minister suspected of corruption was stopped from leaving the
country, saying there was no coup. []
"Stops below 1.50 francs accelerated falls in a market with
low liquidity and spurred risk avoiding trade at the year-end,"
said Tomohiro Nishida, treasury department manager at Chuo Mitsui
Trust and Banking Company.
Forex moves have become more erratic as dealers tend to be
unwilling to hold positions for long before the year's close.
"In this thin market, it's no surprise that the market could
be volatile. And since there is no clear direction now in the
market, stops could play a major role," said a trader at a
Japanese trust bank.
The net result of a series of position liquidations was the
dollar retreating from three month highs hit the previous day.
The euro, which struggled on Thursday after S&P became the
second rating agency this month to downgrade Greece, rose 0.3
percent to $1.4383 <EUR=> after falling to $1.4304 the previous
day, its lowest since early September.
The dollar index, a gauge of the greenback's performance
against other six major currencies, fell 0.3 percent to 77.498,
off Thursday's high of 77.943, its highest since early September.
Yen crosses fluctuated but came off the steepest of their
earlier lows on short-covering.
The euro was steady on the day at 128.90 yen <EURJPY=R>,
sterling slipped 0.2 percent <GBPJPY=R> and the Australian dollar
fell 0.2 percent <AUDJPY=R>.
The Bank of Japan voted as expected to keep its overnight
call rate target at 0.1 percent on Friday and said it would not
tolerate deflation, backing concerns from the government and
potentially setting the scene for more easing. []
BOJ Governor Masaaki Shirakawa holds a news conference later
with embargoed comments expected to come out some time after 4:15
p.m. (0715 GMT) and markets will be watching for hints on policy.
The yen showed little reaction to the decision, and the
dollar was down 0.4 percent at 89.62 yen <JPY=>.
(Additional reporting by Satomi Noguchi; Editing by Joseph
Radford)
