* Singapore widens trading band for Singapore dollar
* Euro rises above $1.4100, highest in more than 8 months
* Aussie flirts with parity, dollar-index hits 2010 low
(Changes dateline, adds quote, detail, previous TOKYO)
By Neal Armstrong
LONDON, Oct 14 (Reuters) - The U.S. dollar index hit the year's low on Thursday while the Australian dollar flirted with parity after Singapore widened its currency's trading band, piling more pressure on to the struggling greenback.
The Australian dollar, which boasts the highest yield among major currencies and with close links to Asian currencies, soared to a 28-year peak at $0.9994 as investors continued to dump the U.S. dollar on expectations the Federal Reserve will start further money-printing next month.
The move by Singapore to widen the trading band of the Singapore dollar, which hit a new record high, prompted a clean break by the euro through $1.4000, triggering euro buy orders and drawing model accounts into the fray.
With interest rates at record lows in developed markets, yield-hungry investors are piling cash into emerging markets. The tide of money is rising ahead of an anticipated second round of quantitative easing by the Fed.
The dollar index, which tumbled 1 percent to its weakest since December at 76.259, is on course for a test of trendline support at 75.95, with its November low of 74.17 then not far away. The 75.95 target is the trendline from two major lows in July 2008 and in November 2009.
The euro, which surged above $1.4100 in early European dealing, faces resistance at $1.4195 in its sights, the January 25 high.
With key levels having broken in most major currency pairs, investors were focused on the Australian dollar's assault on parity.
"The Aussie rally is being driven by strength in the Australian economy together with supply and a general depreciation of U.S. dollars. There are barriers at parity but it's difficult to see the trend changing," said Lauren Rosborough, senior currency strategist at Westpac in London.
The Aussie traded at $0.9978 with traders saying option barriers at $1.0000 were slowing the rally. It has gained more than 11 percent so far this year and is up around 24 percent from a low in May.
The dollar also hit the latest in a succession of record lows against the Swiss franc and slid below parity with the Canadian dollar, a level not seen since April.
Commodities rallied as the dollar fell, with gold hitting a record high and silver climbing to its priciest in 30 years.
The euro jumped above $1.4100 on trading platform EBS, its highest in more than eight months. After failing to crack $1.40 the previous session, its move caught some players, who had been expecting more consolidation, by surprise as it triggered stops around $1.4030 and then $1.4050.
CATALYST
Momentum picked up after Singapore widened the trading band for its currency and said it would maintain modest and gradual appreciation in the Singapore dollar. The Monetary Authority of Singapore sets policy by managing the Singapore dollar in a secret trade-weighted band against a basket of currencies, instead of setting interest rates.
The U.S. dollar fell, touching a record low of S$1.2888.
"Singapore raised its currency more than expected. That has opened the possibility of more strengthening in Asian currencies, including China, ahead of the G20 meetings," said Hideaki Inoue, forex manager at Mitsubishi Trust Bank.
The U.S. dollar fell 0.8 percent to a fresh 15-year low of 81.04 yen, despite constant wariness about Japanese intervention, nearing its record low of 79.75 hit in April 1995.
While traders think Japan could intervene at any moment to keep the yen in check, some market participants speculated that Tokyo may prefer to avoid intervention ahead of G20 meetings.
(Additional reporting by Hideyuki Sano)