* Euro edges up, little reaction after ECB holds rates
* Trichet awaited; focus on liquidity, bond buy measures
* Euro supported after Spanish, French bond auction results
(Adds detail, updates prices)
By Tamawa Desai
LONDON, Dec 2 (Reuters) - The euro held firm on Thursday
after rising the previous day as investors waited to see if the
European Central Bank would take more steps to calm euro debt
concerns, but could fall again if the central bank disappoints.
The euro offered limited reaction to the ECB's widely
expected decision to hold its main refinancing rate at 1.0
percent. President Jean-Claude Trichet is expected to offer more
policy details when he speaks to reporters at 1330 GMT.
[]
Investors expect the ECB will keep unlimited liquidity
operations in place for longer to help banks secure funding,
while speculation has been brewing that the central bank may
step up its bond purchases [] [].
"The focus is on whether Trichet will announce a numerical
target for bond purchases. If he keeps to saying they are ready
to buy more bonds but without a numerical target, the markets
will be disappointed and turn negative on the euro," said
Roberto Mialich, currency strategist at Unicredit in Milan.
The ECB has been under pressure to soothe market sentiment
after a bailout plan announced for Ireland last month stoked
speculation that other euro zone nations struggling to repay
their debts may also seek help from the European community.
By 1252 GMT, the euro was up 0.2 percent on the day at
$1.3177 <EUR=>, holding gains after jumping more than 1 percent
the previous day as investors pared short positions in the
single currency.
Earlier this week, it sank to an 11-week low of $1.2969 on
concerns that countries including Portugal and Spain may be the
next countries to seek an EU bailout.
Some investors were expected to dump euro/dollar long
positions ahead of key U.S. payroll data due out on Friday.
"The (U.S.) ADP numbers raised expectations Friday's jobs
report will not be so bad, making players adverse to holding
excessive euro/dollar longs," Unicredit's Mialich said.
Early gains in the euro were limited by bids from Asian and
Middle East accounts seen around $1.3130, traders said.
It rose to the day's high of $1.3217 after stop-loss orders
were triggered above $1.3180 and after the results of Spanish
and French government bond auctions showed they were relatively
well received. [] []
The euro held above its 200-day moving average at $1.3123,
but analysts said disappointment from the ECB could see it
resume the fall it began in early November and head back below
$1.30.
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Interactive timeline on euro zone debt crisis in 2010:
http://link.reuters.com/nyx95q
Multimedia coverage on the euro zone crisis on Top News:
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"If (the ECB) can get a temporary positive spin on things we
will get a chance to sell at $1.33 and if they don't we will
have to crush the euro back through $1.30," a London-based
trader said.
"Either way, it's a sell," he said, adding the ECB at this
point can do "nothing more than keep the wolves at bay for a bit
longer."
The euro was earlier supported after a U.S. official told
Reuters Washington would support boosting an EU rescue facility
via IMF funds, although a Treasury Department spokesman later
said an "extra commitment is not something we're discussing
right now". [].
The U.S. dollar was little changed against the yen at 84.25
yen <JPY=>, not far from a two-month high of 84.41 yen hit on
Monday. Robust U.S. data and higher U.S. bond yields may support
the greenback, traders said.
(Additional reporting by Naomi Tajitsu, editing by Ron Askew)
