* Euro edges up vs dollar, hits 1-mth high vs CHF
* Support seen from speculation of euro zone debt measures
* EUR/USD briefly hits day's high after strong Spain auction
(Adds comment, details, updates prices)
By Naomi Tajitsu
LONDON, Jan 13 (Reuters) - The euro hit a one-month high
against the Swiss franc and edged up versus the dollar on
Thursday as speculation that measures to tame the euro zone debt
crisis may be on their way prompted short covering.
The euro briefly nudged up to the day's high versus the
dollar after strong demand at a Spanish government bond auction
cooled speculation that debt problems plaguing Greece, Ireland
and Portugal will spread to Madrid and beyond. []
Traders said jitters before an upcoming emergency meeting of
Swiss unions and industry representatives triggered selling in
the Swiss franc against the euro, pushing the euro <EURCHF=R> to
1.2837 francs, its highest since mid-December.
The euro was supported after German Finance Minister
Wolfgang Schaeuble said on Wednesday that euro zone countries
are working on a "comprehensive package", which may be agreed by
February or March, to solve the bloc's debt crisis.
[]
Strong demand at the Spanish auction, which came on the
heels of a solid sale of Portuguese debt on Wednesday, also
bolstered the euro, but some analysts said gains may be limited.
"Both the Portuguese and the Spanish auctions were concerns
at the beginning of the week and both seem to have gone off
reasonably well," said Raghav Subbarao, currency strategist at
Barclays Capital.
"But in the medium term there are still concerns about the
policy and political perspective regarding how their debt
situations will be resolved, and I don't think anything has
changed because of these auctions."
He argued that Portugal's snowballing debt financing costs
will ultimately force the country into asking for an EU/IMF
bailout, while Spain faces a hefty rollover of existing debt in
April. Still, a bailout for Madrid was unlikely, Subbarao added.
The euro <EUR=> was flat on the day at $1.3150, after edging
up to a session high of $1.3171 after the Spanish auction
results. It recovered from an early slide to $1.3089.
Hovering around $1.3152, the 50 percent retracement of the
recent fall from around $1.3435 to $1.2870, the single currency
was also supported by its 200-day moving average of $1.3070
after it rose as high as $1.3145 on Wednesday.
The euro has recovered from a fall to around $1.2860 on
Monday, its weakest since mid-September.
EURO SUPPORT?
Analysts said the euro may see some support on speculation
that a concrete solution to the debt crisis may come soon.
"We're wary of positioning for euro downside too
aggressively because there seems to be more news that Germany
and France are going to push through some emergency resolution
package," said Geoffrey Yu, currency strategist at UBS.
Still, others argue the euro remains vulnerable to selling
if euro zone debt problems deteriorate further.
The European Central Bank announces its monthly policy
decision later in the day, and President Jean-Claude Trichet
will speak to reporters at 1330 GMT.
While no policy changes are expected, markets will focus on
the central bank's bond-buying programme and its reaction to
higher inflation. []
Support for the euro kept the dollar weak. The dollar index,
which tracks the greenback's performance against a basket of
major currencies, was a touch lower on the day at 79.98 after
having lost about 1 percent this week.
The dollar moved sideways against the yen at 82.98 yen
<JPY=>, holding within the previous session's trading range.
The Aussie was slightly higher at $0.9966 <AUD=D4>, with
strong commodity prices helping to shake off losses suffered
after a surprisingly small rise in employment data.
(Editing by Ruth Pitchford)
