* Euro recovers after Irish bank announcement
* Dollar/yen drops to 15-year low
* Euro extends all-time low versus Swiss franc
* Little euro chart support until 1.2700 vs Swiss franc (Adds quote, details, updates prices)
By Nick Olivari
NEW YORK, Sept 8 (Reuters) - The euro recovered from losses and rose against the dollar and the yen on Wednesday after Ireland's finance ministry said nationalized lender Anglo Irish Bank will be split into a funding bank and an asset recovery bank to wind down its assets.
Earlier, the yen struck a 15-year high against the dollar and the Swiss franc hit an all-time peak versus the euro as concerns about euro zone banks and sovereign debt prompted a flight to safety.
While the rally in the yen and franc eased as the New York session got under way, with the euro climbing to a session peak, analysts cautioned that overall risk aversion was intact.
Concerns about how Ireland dealt with the troubled Anglo Irish Bank and Germany's announcement that it will not back a euro rescue fund forever highlighted problems in weak euro zone countries and had weighed on risky assets.
"Just the (Irish) announcement bought a little relief rally" in the euro, said John McCarthy, director of foreign exchange trading at ING Capital Markets in New York. "But people are looking to sell the euros in substantial rallies as issues such as sovereign debt in the euro zone have not gone away."
The euro was up 0.5 percent at $1.2746, trading between a peak of $1.2762 and a low of $1.2660 earlier.
The euro rose 0.7 percent to 107.00 yen, after earlier threatening to revisit August's nine-year low just below 105.50.
YEN WATCH
Earlier in the global trading day, persistent buying by investors seeking a temporary refuge in the yen helped push the greenback through a major option trigger below 83.50 yen, again testing the Japanese authorities' pain threshold for strength in their currency.
"Not surprisingly, more rhetoric from Japanese policymakers has been unleashed, though the legitimacy of such talk is still in question until we see some actual action," said Sacha Tihanyi, currency strategist at Scotia Capital in Toronto.
Bank of Japan Governor Masaaki Shirakawa reiterated his reluctance to return to quantitative easing although he indicated the central bank was weighing its options. Finance Minister Yoshihiko Noda again warned he would take decisive action if necessary.
"The growth and changing nature of FX since the Japanese last intervened should dampen their hopes for now. The speed of the move will be the cue ... My fresh target for dollar/yen is now 79.50 and for euro/yen 104.50," a London trader said.
The dollar fell as low as 83.34 yen on electronic trading platform EBS and 83.35 on Reuters data, its cheapest since 1995, when it struck an all-time low of 79.75.
It later recovered to 84.00 yen, up 0.2 percent on the day.
SWISS FRANC IN DEMAND
The euro is still below a three-week high of $1.2920 hit on Monday on EBS, pressured after a newspaper report Tuesday reignited concerns about European sovereign debt and banks' exposure.
Adding to these worries was German Chancellor Angela Merkel's comment on Tuesday that Berlin will not support prolonging rescue mechanisms to underpin the euro indefinitely because it would damage the single currency. The euro's losses were limited as it found support at the 100-day simple moving average around $1.2670. Technical analysts saw the next support at $1.2605, the 50 percent retracement of the euro's May-to-August rally.
Analysts said a significant move below $1.27 required fresh downward impetus.
"We've had a lot of negative chatter (about euro zone banks) in the past few days, but no new, concrete news," said Peter Frank, currency analyst at Societe Generale in London.
"For the euro to keep weakening, we need confirmation of bad news, not just chatter from the local press," he said, adding the next big risk for the euro was Hungary, which must find a way to plug a gaping hole in its 2010 budget..
The euro fell to a record low versus the Swiss franc of 1.2765 francs on EBS after taking out the previous day's record low and traders saw little chart support until 1.2700. The record low on Reuters data was 1.2766.
The dollar fell to a nine-month low on EBS of 1.0060 francs. The daily low on Reuters data was 1.0063 francs.
The euro was last up 0.6 percent at 1.2906 francs and the dollar up 0.1 percent at 1.0124 francs.
Elsewhere the Bank of Canada raised its key interest rate by 25 basis points to 1 percent as expected but said a weak U.S. economy would hamper Canada's recovery..
The U.S. dollar was last down 1 percent at C$1.0371. (Additional reporting by Neal Armstrong in London; Editing by Andrea Ricci)