* Investors stay jittery over euro zone debt crisis
* Euro hits lifetime low vs Swiss franc
* Fed policymaker says Europe's woes no big threat to U.S.
* Sterling slips on Fitch's UK debt warning
(Adds details, changes byline)
By Steven C. Johnson and Vivianne Rodrigues
NEW YORK, June 8 (Reuters) - The euro rose on Tuesday as
investors booked profits a day after the currency hit its
lowest level against the dollar since early 2006, and the pound
fell after a ratings agency urged Britain to cut its deficit.
The euro also hit an all-time trough below 1.38 Swiss
francs but rebounded sharply in late morning, with traders
citing Swiss National Bank intervention to weaken the franc.
The SNB declined to comment. For details, see [].
Against the dollar, the euro rose above $1.20 after
tumbling to $1.1876 on Monday, its lowest level since March
2006. But analysts said the market was still anxious about debt
levels in several euro zone countries and debt auctions this
week from Portugal and Spain.
"The euro decline isn't over," said Marc Chandler, senior
strategist at Brown Brothers Harriman in New York. "There are
supply concerns this week, and what we're seeing now is a brief
respite. A rise above $1.20 would be a good chance to sell."
In afternoon trading in New York, the euro was up 0.4
percent at $1.1958 <EUR=>, near a $1.2008 session peak,
according to Reuters data. Analysts said it also saw support
after euro zone ministers made final arrangements Monday to set
up funds for countries facing debt problems. It was up 0.3
percent at 109.15 yen <EURJPY=>.
The euro has shed more than 16 percent against the dollar
this year, and some economists worry this will hurt U.S.
exports to the euro zone, a fear Chicago Federal Reserve
President Charles Evans downplayed on Tuesday. []
SWISS SPECULATION, UK DEBT WORRIES
The euro's abrupt rebound from its low against the Swiss
franc spurred talk of intervention by the Swiss National Bank.
Switzerland's central bank has intervened in currency
markets since 2009 to prevent excess franc strength but slowed
its euro purchases recently as the euro fell below 1.40 francs.
The euro was last down 0.7 percent at 1.3759 <EURCHF=>.
"Certainly the price action minutes ago seemed to suggest
intervention. though we've no official confirmation," said one
market participant at a U.S.-based bank about the euro's jump.
Sterling fell 0.4 percent to $1.4407 <GBP=D4> after Fitch
Ratings said the UK was facing a "formidable" fiscal challenge
and said Britain's public debt ratio had climbed more quickly
than those of other top-rated sovereign credits. []
"It's more of the contagion fear that's been gripping
markets for months now," said John Doyle, strategist at Tempus
Consulting in Washington.
The dollar was flat at 91.26 yen <JPY=>. Earlier, new
Japanese Prime Minister Naoto Kan chose a fiscal conservative
as his finance minister. Kan has in the past advocated a weaker
yen to help Japanese exports and fight deflation, but Chandler
said that might be wishful thinking as long as markets are in
crisis mode.
During times of risk aversion, the yen tends to rise as
investors exit positions in riskier currencies and assets.
On Monday, technical analyst Robert Prechter told the
Reuters Investment Outlook Summit in New York that the euro is
likely to bottom out against the dollar within two weeks.
In the meantime, though, Citigroup strategists said they
expect risk aversion to continue to hold sway in markets.
[]
A widening gap between Spanish and German 10-year bonds and
a close Monday in the CBOE Volatility Index <.VIX> above a key
technical level suggest an "anti-risk environment in the days
ahead," they wrote in a note to clients, which should pressure
the euro and boost U.S. Treasury yields.
(Additional reporting by Naomi Tajitsu in London; Editing by
Andrea Ricci)
