(Refiles to add links)
* Euro losses extend, drops through $1.3900
* Ireland central focus in euro zone periphery worries
* Yen gains across board, dollar back below 81.00 yen
By Hideyuki Sano and Charlotte Cooper
TOKYO, Nov 9 (Reuters) - The euro's losses deepened on
Tuesday as resurfacing concerns about peripheral euro zone debt
kept it under pressure, and as some players closed long euro
plays against the dollar ahead of year-end book-closing.
The euro fell to its lowest in over a week against the
dollar, testing support at $1.3835 and with potential for a slide
to more important support at its Oct. 20 low around $1.3700.
The dollar eased against the yen with Tokyo dealers saying
one foreign bank had been selling dollars, triggering stops
around 80.80 yen which pushed it down and wiped out some of its
strength.
One trader said there was also talk of large accounts in Asia
selling the euro over the past day. The European currency was on
the back foot against the yen, shedding 0.7 percent after a drop
of 0.8 percent on Monday.
The market became very short dollars ahead of last week's
Federal Reserve decision on additional bond buying and part of
the euro's falls stem from unwinding of dollar short positions,
while the market is turning whippy as liquidity thins.
Gareth Berry, strategist at UBS in Singapore, said the market
was seeing concern about Ireland as a chance to get in and sell
the euro after its rally from $1.27 in September to a 10-month
high of $1.4283 last week.
"It could quickly become a dollar positive story given
positioning being the way it is," Berry said.
A trader at a European bank said some macro players and
Commodity Trading Advisers, who are short-term players, are
closing their short positions in dollar forwards and futures
ahead of their book closing at the end of this month or next.
However, they were still sticking to dollar bearish views and
were buying dollar puts at the same time to capitalise on any
further drop.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
G20 battle lines: http://r.reuters.com/jux34q
Basel III; rule reshaping: http://r.reuters.com/zys68p
Gold price performance: http://link.reuters.com/juz44q
Trade, currency tensions simmer pre-G20 []
Obama hits back after China slates Fed moves
[]
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Some say many players have not had an easy year and might
close their books earlier than normal, meaning liquidity could
thin out towards the end of the month and into early December.
The euro fell 0.4 percent to $1.3872 <EUR=>, having found
some support near $1.3835, a 76.4% retracement of its move up
from $1.3697 on Oct. 20 to $1.4283 on Nov.4.
A more important support is its Oct. 20 low of 1.3695, where
a break could signal that the currency has peaked near term.
Against the yen, the euro shed 0.7 percent to 112.16 yen
<EURJPY=R>, threatening a sustained break of major support around
112.20 yen -- the top of the cloud on the daily ichimoku chart.
The euro also hit two-month lows versus the Aussie at
A$1.3685 <EURAUD=R>.
EU Economics Commissioner Olli Rehn, on a visit to Ireland,
said he had not discussed any need for an EU bailout with the
country, and that he believed market confidence would be restored
once the country published its four-year plan to cut debt.
Ireland is expected to publish details of its plan later this
month. []
Worries about a political impasse in Dublin ahead of a key
budget vote saw 10-year Irish bond yields <IE10YT=TWEB> shoot
above 8 percent on Monday -- much higher than the cost of
borrowing from the European Union's emergency fund.
"A clear-cut solution (and therefore a reversal in spread
widening) seems unlikely and as long as uncertainty prevails,
spreads will remain under pressure," said RBC Capital Markets
strategist Matthew Strauss.
"That is good news for USD bulls, but sombre news for risk
bulls as an escalation of these concerns could easily spill
over into broad-based risk aversion, adversely affecting
commodity currencies such as AUD and CAD."
The dollar index <.DXY><=USD>, a measure of its performance
against a basket of currencies, edged up 0.2 percent to 77.19.
The dollar was still down 0.3 percent on the day at 80.95 yen
<JPY=> after earlier holding steady above 81.00. It remains
within sight of its 1995 record low of 79.75 yen and capped at 82
yen, where offers from Japanese corporates were seen.
"Unless we have new trading factors, it's hard to see the
dollar/yen rising above that level," said Daisuke Karakama,
market economist at Mizuho Corporate Bank.
The Australian dollar, which tends to suffer if risk appetite
retreats, fell 0.2 percent against the dollar <AUD=D4> and 0.6
percent against the yen to 81.76 yen <AUDJPY=R>.
But fellow high-yielder the New Zealand dollar plunged 0.8
percent to $0.7819 <NZD=D4> and 1.2 percent to 63.18 yen
<NZDJPY=R> as reports of a bacterial infection in a New Zealand
kiwifruit orchard also weighed it down.
The market is also watching this week's meeting of G20
leaders in South Korea, pitched as a chance for them to prevent a
currency row escalating into a rush to protectionism that could
imperil the global recovery.
But there is little sign of consensus and the meeting has
been overshadowed by disagreements over the Fed's quantitative
easing policy. Anticipation of the Fed move helped depress the
dollar and raised fears it may cause a destabilising flow of
money into emerging economies.
Concerns that the Fed's aggressive easing could stoke more
inflation than it wants also helped to push spot gold <XAU=> to a
record high of $1,412.75 an ounce.
(Additional reporting by Ian Chua in Sydney and FX analysts
Krisha Kumar in Sydney and Rick Lloyd in Singapore; Editing by
Joseph Radford)
