* Euro also nears 8 1/2-yr low vs yen
* China June PMI below forecast, hurts Aussie
By Rika Otsuka
TOKYO, July 1 (Reuters) - The euro hit a record low against
the Swiss franc and the Australian dollar also fell on Thursday
as weaker-than-expected Chinese data added to doubts about the
strength of the global recovery.
The Chinese data sparked selling in higher-yielding
currencies, with one trader saying low liquidity and short-term
speculators taking punts on the euro against the Swiss franc and
the Australian dollar against the yen added to the volatility.
China's purchasing managers' index (PMI) fell to 52.1 in June
from 53.9 in May, weaker than the median forecast of 53.1.
<CNPMIB=ECI>
The index was still above the threshold of 50 that separates
expansion from contraction but the more modest rate of growth in
the leading indicator stoked worries that a sharper slowdown is
in store in the second half of this year.
"The Chinese PMI data was the latest factor making investors
reluctant to take risks," said Hideki Amikura, deputy general
manager of forex trading at Nomura Trust and Banking.
The euro fell as low as 1.3073 Swiss francs <EURCHF=R> on
trading platform EBS, its weakest since the single European
currency's launch in 1999.
The Australian dollar fell 0.4 percent to $0.8367 <AUD=D4>,
after dropping to an intraday low of $0.8315.
The Aussie dollar later pared its losses after the Sydney
Morning Herald newspaper reported that Australia's government and
key mining companies are on the brink of a framework agreement on
a mining tax compromise, quoting sources with knowledge of the
talks. []
An agreement would remove uncertainty in the market and any
watering down of the tax proposal would be considered positive
for investments and hence the Aussie dollar, traders say.
The yen edged higher, with the euro dipping 0.1 percent to
108.09 yen <EURJPY=R>. The euro fell as low as 107.50 yen
earlier, nearing an 8-1/2-year trough of 107.30 yen hit earlier
this week.
The dollar was down 0.1 percent at 88.38 yen <JPY=> after
striking a two-month low of 88.08 yen on EBS earlier.
Traders cited talk of an option trigger near 88.00 yen, while
the dollar's 2010 low lies at 87.95 yen.
The yen's latest rise has brought it to levels that could
cause pain to Japanese exporters if its gains are sustained, with
the Bank of Japan's tankan survey showing the average forecast
for the dollar/yen rate in the year to next March among large
manufacturers is 90.18 yen.
Market players say a fall in the dollar to levels below the
2010 low could open the way for a drop toward 85.00 yen, and put
the focus on whether Japanese authorities may take steps to curb
the yen's rise.
Last December the Bank of Japan called an emergency meeting
soon after the dollar slid to a 14-year low of 84.82 yen in
November, and decided to pump 10 trillion yen ($113.1 billion) in
three-month funds into the banking system.
EURO FALTERS
The euro slipped 0.1 percent to $1.2211 <EUR=>, giving back
some of the previous day's advances.
It gained on Wednesday on news that euro zone banks borrowed
less than expected from the European Central Bank (ECB). The ECB
said 171 banks borrowed 131.9 billion euros ($161.3 billion) over
a three-month period, below expectations of 210 billion euros.
[]
The amount is still the highest ever borrowed in a
three-month period but pales beside the 442 billion euros of
one-year money which banks must repay to the ECB on Thursday.
Spanish, Portuguese and Greek banks have been the biggest
users of the facility. Gains in the euro were limited, however,
after Moody's Investors Service said it may cut Spain's Aaa
sovereign debt rating on deteriorating economic growth prospects.
[].
The market focus now turns to the ECB's six-day tender later
in the session. Expectations are for it to be subscribed to the
tune of 75-125 billion euros. A lower-than-expected level of
subscription could underpin the euro.
"In addition, Spain's five-year bond auction requires
attention especially following the news on the possible downgrade
in the country's rating," JP Morgan said in a morning note.
($1=88.38 Yen, $1=.8175 Euro)
(Additional reporting by Anirban Nag in Sydney and Masayuki
Kitano in Tokyo; Editing by Michael Watson)
