FOREX-Dlr up vs euro on euro zone fears; aussie, kiwi up

* Investors shrug off U.S. trade and jobless data

* Greece, Spain worries still weigh on investors

* Aussie, kiwi gain on rate hike prospects

* BoE holds rates, SNB keeps FX intervention threat (Recasts, updates prices, adds details, adds comments)

NEW YORK, Dec 10 (Reuters) - The dollar gained against the euro on Thursday as a focus on problems in the euro zone increased some safe-haven demand for the greenback, overshadowing a narrower-than-expected U.S. trade deficit for October and some improvement in U.S. jobless claims.

The dollar had fallen against the euro for the second straight day earlier in the New York session after the U.S. data, but the gains in the euro were swept away amid ongoing concerns over the fiscal health of Greece and Spain

Standard & Poor's cut Spain's credit outlook to negative on Wednesday, a day after Fitch downgraded Greece's credit rating, sparking concerns about sovereign debt.

The Australian and New Zealand dollars both rose on growing expectations of higher interest rates.

"Increased sovereign risk associated with the euro will see some headwinds associated with the euro," said Omer Esiner, senior market analyst at Travelex Global Business Payments in Washington.

The euro was last down 0.9 percent at $1.4711 . Against the yen, the dollar was up 0.5 percent at 88.29 yen though off the session peak of 88.45 yen.

A European Central Bank Governing Council member, Ewald Nowotny, said on Thursday the current worries about Greece's finances would not break up the euro zone [ID:nFAE005544].

"The euro has probably taken a bit of a hit from these internal problems in the euro zone," said Johan Javeus, currency strategist at SEB in Stockholm.

The U.S. trade deficit shrank to $32.94 billion in October from a revised $35.65 billion in September, the government said. Economists expected a deficit of $36.8 billion for the month. [ID:nN09169993] [For a graph, click http://link.reuters.com/myv26g].

The latest trade numbers finally reflect the positive implications of a weaker dollar, said Kathy Lien, director of currency research at GFT Forex. U.S. trade with China was particularly strong, with exports reaching a record $6.9 billion, "which tells us that the U.S. is also a beneficiary of the recovery in China."

The U.S. Labor Department reported continuing claims for jobless benefit, or the number of workers still collecting benefits after an initial week of aid, fell to 5.16 million in the latest week from a revised 5.46 million in the prior week [ID:nN10153952].

ADVANCE AUSTRALIA FAIR

Strong Australian jobs data fueled anticipation that rates will rise in Australia, and the Reserve Bank of New Zealand signaled its rates may go up sooner than thought.

The Australian dollar added 0.9 percent against the dollar to $0.9171, while the New Zealand dollar gained 1.7 percent to $0.7312, also hitting its highest level since late November.

Gains in the currencies prompted analysts to speculate the market may be switching from the recent trend of trading on risk sentiment, which has seen the euro tend to gain in tandem with higher-yielders like the Australian dollar.

"Interest rates are becoming a more important factor, and the market is looking more at fundamentals now," said You-Na Park, a Commerzbank analyst in Frankfurt.

Sterling was last little changed against the dollar at $1.6251, and barely budged after a widely expected decision by the Bank of England to hold interest rates at a record low 0.5 percent and keep its asset-buying program unchanged.

The euro was little changed against the pound at 90.56 pence .

The Swiss franc dipped briefly after the Swiss National Bank (SNB) held interest rates steady and stuck to its pledge to fight an appreciation of the franc decisively. [ID:nZUX000032]

This was tempered, however, as the bank dropped its offer to buy corporate bonds, the first signs it was easing drastic stimulus measures, and as SNB Chairman Jean-Pierre Roth said the franc had stayed stable versus the euro. [ID:nGEE5B81FC]

The euro briefly rose to a session high around 1.5134 francs , according to Reuters data, before dipping to around 1.5113, little changed on the day.

There was little impact on foreign exchange markets from remarks by U.S. Treasury Secretary Timothy Geithner on Thursday that the government had to beware declaring victory too soon after managing to avert complete financial collapse by bailing out the nation's banks.[ID:nWEQ003650]. (Reporting by Nick Olivari; Additional reporting by Wanfeng Zhou in New York and Jessica Mortimer in London; Editing by Leslie Adler