FOREX-Euro plunges on renewed bank and economic concerns

* Euro takes a hit as Europe banking concerns rekindled

* Yen rises to 15-year high versus dollar (Adds quote, updates prices)

NEW YORK, Sept 7 (Reuters) - The euro slid broadly on Tuesday and the yen hit a 15-year high as renewed fears about the health of the European banking sector sparked risk aversion.

A Wall Street Journal report that highlighted the shortcomings of European bank stress tests in July spurred buying in the yen and the Swiss franc, which are traditional safe havens. The euro fell to a record low against the Swiss franc.

The yen was also bolstered after comments by Bank of Japan Governor Masaaki Shirakawa increased speculation that Japan was not preparing to act to stem the strength of the Japanese currency at the moment.

And the euro was also weighed by comments from Germany's banking association on Monday that the country's 10 biggest banks may need 105 billion euros of additional capital under revamped rules. A fall in German manufacturing orders in July added to the euro's woes.[ID:nLDE6850Q9][ID:nBAF004244].

Worries about the banking sector also drove yield spreads between peripheral euro zone government bonds and their German counterparts -- considered the safest in the euro zone -- to widen, with Portuguese and Irish spreads in focus.

And the cost of insuring those countries' debt against default rose, further chilling demand for the single currency.

"The market has been able to give full attention to the negative European developments," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.

The developments include new questions about the bank stress tests, concerns over the amount of capital that will need to be raised under Basel III [ID:nLDE6850Q9], and reports suggesting euro zone governments will seek to raise 100 billion euros this month, roughly twice the amount raised in August, Chandler said.

Midway through the New York trading day, the euro slipped 1.1 percent to $1.2732, the session low on Reuters data and well off a three-week high of $1.2920 hit on electronic trading platform EBS on Monday .

The focus was turning to significant option expiries on Thursday, when an estimated 1 billion euros are set to roll off at $1.2600.

DOLLAR/YEN BELOW 84 YEN

Against a backdrop of mixed signals from Japan, the single European currency fell 1.7 percent against the yen to 106.57 yen. The yen rallied across the board, last pushing the dollar down 0.6 percent to 83.69 after hitting a 15-year low of 83.51 on EBS and 83.52 on Reuters data.

Earlier in the trading day, the Bank of Japan's Shirakawa said monetary authorities could not control forex rates, increasing speculation that Japan was not preparing to act to stem yen strength at the moment. [ID:nTOE68606B]

Shirakawa "has essentially ruled out intervention in the near term," CitiFXWire analysts said in a client note, adding that the statement helped to encourage yen bulls.

Shirakawa's comments followed the BOJ's decision to hold off from additional monetary policy easing. [ID:nTOE68602K]

However, Japanese Finance Minister Yoshihiko Noda on Tuesday said the government would take firm action on currencies when needed, saying recent moves were clearly one-sided. [ID:nTKX006976]

Ashraf Laidi, chief market strategist at CMC Markets in London said the Japanese currency is being bolstered by expectations that incumbent Prime Minister Naoto Kan will stave off a leadership challenge by rival Ichiro Ozawa [ID:nTOE68606H].

"The latter has shown vocal support in favour of yen-supressing intervention," said Laidi.

The market's focus on risk aversion also boosted the Swiss franc, pushing the euro 1.3 percent lower to 1.2860 francs. It fell to a record low of 1.2844 francs on EBS and Reuters data. The dollar was down 0.3 percent at 1.00097 francs.

The Australian dollar was down 0.5 percent at $0.9128, hurt by general lack of risk appetite and as the ruling Labor Party secured enough numbers to form a minority government [ID:nSGE6850I3]. Labor's return to power has made some investors cautious, with the government expected to move forward with a tax on mining company profits. (Reporting by Nick Olivari; Additional reporting by Anirban Nag; Editing by Leslie Adler)