* Euro up 0.1 pct vs dollar <EUR=>; bond auctions support
* ECB leaves rates on hold as expected; Trichet awaited
* ECB seen extending offer of unlimited funds
* Swedish crown hits 2-yr high vs euro on Riksbank rate hike
(Releads, adds quote, updates prices)
By Jessica Mortimer
LONDON, Sept 2 (Reuters) - The euro edged up on Thursday
after healthy results at Spanish and French bond auctions but
investors cautiously awaited comments from European Central Bank
President Jean-Claude Trichet.
The ECB earlier left interest rates unchanged, as expected,
at 1.0 percent. The decision had little impact on the euro.
[] Trichet was due to hold a news conference at
1230 GMT.
Market players were waiting to see whether the central bank
extends lending support for banks, despite raising its growth
forecasts, and will be watching to see how cautious Trichet is
on the economic outlook. []
"Markets are a little cautious. If Trichet does sound
concerned about the outlook then that would be negative for the
euro," said Niels Christensen, currency strategist at Nordea in
Copenhagen.
Earlier data confirmed the euro zone economy grew by 1.0
percent quarter-on-quarter between April and June.
[]
Christensen said currency markets would also take their cue
from developments on equity markets, while U.S. weekly jobless
claims at 1230 GMT would be watched for signals on U.S. labour
market health before payrolls data on Friday. <ECONUS>
At 1147 GMT, the euro was up 0.1 percent at $1.2823 <EUR=>,
gaining support after Spain and France drew decent demand as
they sold a combined 12.2 billion euros in bonds.
[]
The next target for the euro was around $1.2873 -- a 38.2
percent Fibonacci retracement of its fall from its August peak
of $1.3334 to its August low of $1.2588. The target after that
would be $1.2923, touched on Aug. 18.
The dollar index, a gauge of the greenback's performance
against six major currencies, fell 0.2 percent at 82.372 <.DXY>
after falling 0.8 percent on Wednesday, its biggest one-day fall
in six weeks. Support was seen at the Aug. 18 low of 81.912.
Upbeat U.S. and Chinese manufacturing data on Wednesday
lured investors away from perceived safe-haven assets, lifting
stocks, commodities and higher-yielding currencies.
"With so much uncertainty, the market is very volatile and
moves depend on the daily data flow," said Lee Hardman, currency
economist at Bank of Tokyo-Mitsubishi UFJ.
SWEDISH CROWN GAINS
The Swedish crown rose to its highest in more than two years
against the euro around 9.2955 <EURSEK=D4> after Sweden's
central bank raised its key interest rate to 0.75 percent, as
expected. []
It also left its forecasts for future interest rates
unchanged from July, helping to lift the crown as many in the
market had expected them to lower the profile slightly. The
Riksbank was also upbeat on the economy. See []
However, traders and analysts said investors took profit on
the crown below 9.300 crowns per euro, which provided
psychological support. By 1147 GMT, the euro had recovered to
9.3165 crowns, though it was still 0.2 percent lower on the day.
"It was a surprise that the Riksbank kept their profile for
rate hikes, but investors were quick to take profit below 9.3,"
Nordea's Christensen said.
The dollar was down 0.4 percent at 84.11 yen <JPY=>, close
to a 15-year low of 83.58 yen hit last week. The yen showed
limited reaction to Japan's political heavyweight Ichiro Ozawa
saying action was needed to stem yen gains. []
(Additional reporting by Tamawa Desai)
