REFILE-FOREX-Euro holds near 2-mth highs, high-yielders firm

(Refiles to fix day in first para)

* Euro firm at $1.27, resistance eyed at $1.2740

* Gap widens between 1-mth and 1-yr risk reversals

* High-yielders hold gains on improving risk appetite

By Anirban Nag

SYDNEY, July 9 (Reuters) - The euro held near two-month highs on Friday, while the Japanese yen was under pressure as investors cut long positions and veered towards high-yielding currencies on improving risk appetite.

In Asian trade, the euro was firm at $1.2698, with near term resistance around the May 12 high of $1.2739. It broke past resistance at $1.2673 on Thursday when it advanced nearly 0.5 percent against the U.S. dollar and jumped over 1 percent against the low-yielding yen .

The euro was supported by a cautiously optimistic European Central Bank [ID:nLDE6670DA], strong European industrial production data and a sizable drop in U.S. initial unemployment claims. For details, see [ID:nN08209499].

Despite this week's gains, traders and strategists remained wary about going long on the single currency in a big way, given the fiscal and debt problems that hobble euro zone's economy. In fact, some expect profit-taking and a sell-off soon.

"Even though the euro has had a bit of a renaissance, the longevity of these gains is open to question, and is reflected in a wide gap between the one-month and one-year risk reversals," David Watt, senior currency strategist at RBC Capital.

"Short-term bearishness has dissipated to some extent, but longer-term markets are still prepared to pay a hefty premium for puts over calls."

Indeed, while 1-month risk reversals have fallen nearly 55 basis points to quote at 0.85/1.35 percent since the end of last month, 1-year risk reversals , have declined by about 25 basis points in the same period.

The European Central Bank on Thursday kept interest rates at a record low 1.0 percent at its monthly meeting. ECB President Jean-Claude Trichet said the economic recovery in the euro area continued in the first half of 2010, although he expected growth to show an uneven pace in an environment of high uncertainty.

He offered few details on whether the upcoming stress tests will effectively gauge the health of European banks. Details on the tests will be disclosed later this month. [ID:nECBNEWS].

The euro was firm near a two-week high against the yen, at 112.27 yen, having jumped more than 1 percent in the previous session.

The yen was broadly under pressure as investors cut long positions and shifted funds towards high-beta currencies like the Australian dollar and the New Zealand dollar .

The dollar was firm on the yen at 88.40 yen, having gained 0.8 percent on Thursday. It has managed to pull away from a seven-month low of 86.94 yen struck on July 1.

The yen had made solid gains against the greenback earlier this month on the back of growing worries about an economic slowdown in the United States and falling stock markets <.SPX>.

But those worries seem to have taken a backseat with some of the gloom lifting due to expectations of strong earnings in the U.S. and thus boosting risk appetite.

The Australian dollar was firm around $0.8772 and just below a two-week high of $0.8792 in offshore trade. Momentum towards the Aussie was strong given a strong domestic jobs reading which brought back the risk of near term rate increases.

The New Zealand dollar was around $0.7090, just below a high of $0.7103, its best since June 28. (Editing by Wayne Cole)