* Dollar index hits 8-month low at 78.616
* Euro at 5-month high but hampered by Ireland/Portugal
* Dollar hits post-intervention low against yen
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By Gertrude Chavez-Dreyfuss
NEW YORK, Sept 29 (Reuters) - The dollar fell for a fourth straight session on Wednesday, hitting a fresh five-month low against the euro, as generally weak U.S. economic data fueled expectations of further monetary easing.
Mounting speculation the Federal Reserve could embark on a second round of quantitative easing, which would be negative for the dollar, drove the greenback to a two-year trough against the Australian dollar and a 2-1/2-year low versus the Swiss franc.
"We obviously have a negative combination for the U.S. dollar, and the Fed opening the door for potential easing has just stoked fears of dollar weakness and currency debasement generally," said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto.
Analysts said the dollar could face further losses as a selling trend takes hold, while the euro would continue rising after becoming resilient to economic and banking problems facing some countries on the periphery of the euro zone.
The euro jumped to a five-month high at $1.3644, according to electronic trading platform EBS, before pulling back to $1.3615, up 0.3 percent on the day. Traders say there's an option barrier at $1.3650, which could go given the euro's upside momentum.
Also helping the euro was a report on Wednesday showing euro zone economic sentiment unexpectedly rose in September.
The next big objective for the single euro zone currency is $1.3692, the high hit on April 12, traders said.
"Technically, there are no warning signs that the recent strength in euro is coming to an end. The upward trend is well intact and even with the feeling that the euro has come too far too fast widespread, it is too early to fight the dollar weakening trend," Scotia's Sutton said.
Gains in the euro, however, were capped after Standard and Poor's downgraded nationalized Anglo Irish Bank's lower tier 2 debt to CCC from B.
Irish and Portuguese yield spreads hit euro lifetime highs against German bonds on Tuesday on concerns over those countries' fiscal deficits.
The euro has risen about 11 percent against the dollar so far in the July-September quarter and is on track for its biggest quarterly percentage gain in about eight years, according to Reuters data.
The dollar index was down 0.2 percent at 78.836, not far from an eight-month low of 78.616 hit earlier.
Dollar weakness helped push the Australian dollar to a two-year high of US$0.9730 after a large option barrier at US$0.9700 gave way. It was last at US$0.9697, up 0.2 percent from late Tuesday.
The Swiss franc rose to 0.9735 francs per dollar, a 2-1/2-year high, according to Reuters data. The dollar last traded at 0.9771 francs, up 0.1 percent on the day.
It later gave up those gains after data showed Switzerland's leading growth indicator, the KOF economic barometer, eased to 2.21 in September from 2.22 in August.. The KOF beat forecasts of 2.12, but some in the market had expected an even stronger reading.
The dollar also looked vulnerable against the yen, hitting its lowest since Japan intervened to sell the yen two weeks ago to drive the dollar up from a 15-year low.
Later on Wednesday, the U.S. House of Representatives is expected to pass legislation to pressure China to let its yuan currency rise more quickly..
The dollar fell to 83.50 yen on EBS, its lowest since Sept. 15, when Japan intervened. It was last at 83.66 yen, down 0.3 percent.
Many in the market say Japan is likely to intervene again if the dollar threatens the 83 yen area, as Japan's intervention began after it had hit a 15-year trough of 82.87 yen.