* Swiss franc dives as SNB eyes more steps to weaken it
* SNB's Jordan says bank could peg euro/franc temporarily
* Yen near record high, markets on alert for intervention (Updates prices, adds comment)
By Gertrude Chavez-Dreyfuss
NEW YORK, Aug 11 (Reuters) - The dollar and euro posted their best days ever against the Swiss franc on Thursday, jumping as much as 6 percent after falling to record lows this week, as the Swiss National Bank said it could peg the franc to the euro to rein in a soaring currency.
SNB Vice Chairman Thomas Jordan, when asked about temporarily pegging the franc, said the bank was open to measures consistent with long-term price stability. Traders said the euro/Swiss pair could be fixed at 1.15 francs.
A proposed peg of the Swiss currency, however, drew criticism from most market participants.
"This is very short term. Intervention or these types of programs where you try to subsidize and try to move a market don't work as the Japanese found out in March when they intervened," said Rodney Johnson, co-portfolio manager at Dent Tactical ETF in Tampa Florida.
"It may have a short-term impact, but it won't change the direction. People would still buy the Swiss franc especially if uncertainty in Europe continues," he added.
Johnson said given the volatility in the market he has moved 70 percent of his portfolio into cash, with the remaining 30 percent invested in the euro and commodities.
In late afternoon trading, the euro was up 5.3 percent at
1.08580 francs
The euro though was still down 0.2 percent this week and 13.1 percent lower so far this year.
Implied volatility, a measure of the market's expectations
of future movements, slid on Thursday after the plunge in the
Swiss franc, with one-month euro/franc implied vols
The dollar was last up 4.9 percent to 0.76260 franc
Deutsche Bank's global head of G10 FX strategy Alan Ruskin said anchoring a currency on a fairly unstable euro, which is currently beset by the euro zone's fiscal crisis, could end up destabilizing the Swiss franc itself.
If the SNB were to do the peg, it would be like "jumping into the old exchange rate mechanism in the midst of unprecedented turmoil, while probably being left to defend the band by itself, with limited solidarity from the others, in this case the European Central Bank," he added.
Sharp gains in the euro versus the Swiss franc further helped lift the euro zone common currency against the dollar. The euro last traded up 0.4 percent at $1.42247.
SWISS PEG, NEGATIVE INTEREST RATES
Other analysts said there may be no need to do the peg after all. Credit Suisse said Swiss franc Libor futures are already trading in negative territory. Spot Libors may also go negative as Swiss banks try to discourage foreign wholesale deposits, the bank added.
Negative interest rates, essentially forcing banks to charge clients to hold their money, could dissuade some investors from buying the safe-haven franc, although the peg could be limited.
"Markets are not holding Swiss francs for their return, they're holding them for insurance," said Vassili Serebriakov, senior currency strategist at Wells Fargo in New York. "So a slight negative interest rate may not discourage too much demand for the currency."
The yen, meanwhile, hovered near a record high against the dollar as investors continued to sell riskier assets, fueling speculation Japan may step in to stem the yen's gains.
The dollar fell as low as 76.302 yen on trading platform EBS, within striking distance of an all-time trough of 76.25 yen set in mid-March. It last traded little changed on the day at 76.830.
Earlier in London, the dollar briefly jumped above 77 yen from 76.30 yen, after dealers cited talk that the Bank of Japan was in the market checking the exchange rate for dollar/yen. That is usually an indication Japan is getting ready to buy more dollars to weaken the yen.
The greenback, however, soon fell back after traders said they had not seen any yen-selling intervention by Japanese authorities. A finance ministry official declined to comment. (Additional reporting by Wanfeng Zhou; Editing by Chizu Nomiyama))