* Euro gains as EU leaders reassure bondholders
* Trade volatile on speculation and denial of Irish bailout
* China rate increase talk hurts Aussie (Recasts, adds comment, updates prices; changes dateline, previous LONDON)
NEW YORK, Nov 12 (Reuters) - The euro rose on Friday from a six-week low against the dollar after Europeans leaders sought to reassure nervous bondholders about the value of their holdings.
A statement from France, Germany, Italy, Spain and Britain, issued at the Group of 20 summit in Seoul, said bondholders would not be forced to writedown the value of their bond holdings in the event of a new euro zone bailout, easing pressure on Irish debt that has sparked fresh fears of contagion.
The euro responded to steady buying by macro funds as the cost of insuring Irish, Spanish and Portuguese debt against default fell.
Speculation of a rescue package for Ireland added to the euro's allure earlier in the global session though this was later denied and the single currency fell from the session peak.
"The fact that euro zone officials said Irish bond holders don't have to take a haircut on their existing positions is supportive for the euro," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.
Faith in the value of euro denominated debt bolsters demand for the euro to buy it or conversely not to sell it and seek safer havens in non euro denominated debt.
The euro rose to a session high of $1.3751 well off the session low of $1.3573 on EBS.
It last traded at 1.3731 on Reuters data, up 0.6 percent
The talk of a rescue package for Ireland as early as next week was attributed to a U.S. think tank report. But the Irish Finance ministry said market talk of a bailout package with the EU was untrue.
Two-thirds of economists and bond strategists polled by Reuters on Thursday said Ireland would seek international rescue funds before the end of next year.
At the session low, the euro/dollar broke through the 38.2 percent fibonacci retracement, the 1.3631 level, of the move from the August low to the November peak. The 50 percent retracement comes at 1.3431, with the 61.8 percent at 1.3232.
The euro has shed over 2 percent this week as long positions built before the Fed's bond buying decision last week have been unwound heading into the year-end book-closing season.
G-20
Analysts said the communique from Group of 20 leaders meeting in Seoul was mildly positive as it agreed to tackle tensions that have threatened "currency wars" and trade protectionism..
The G-20 seemed to give the green signal to emerging countries with flexible currency regimes to impose capital controls.
"That seems to have hurt risk appetite a bit and investors are booking profits in riskier assets," said Chris Turner, head of FX strategy at ING in London.
The Australian dollar, a favorite among investors choosing to buy into growth, sold off sharply. It shed more than 1 percent to as low as $0.9825, its lowest since Nov. 1. It was last down 0.5 percent.
Media reports suggested China was planning to limit foreigners investing in its already speculative real estate sector while South Korea was planning capital controls. China's key stock index posted its biggest percentage loss in 14 months, ending down 5.2 percent on Friday on talk of more monetary tightening.
The euro fell to a two-month low against the yen, hitting 111.04 on EBS, but was last little changed at 112.74.
The dollar fell against the yen, moving back towards its 15-year lows. It was down 0.5 percent at 82.15 yen, with Japanese exporters selling into the dollar's recent bounce. (Additional reporting by Anirban Nag in London) (Reporting by Nick Olivari; Editing by Theodore d'Afflisio)