* Euro hits 6-wk high at $1.3158
* ECB's Stark comments cool rate cut expectations
* SNB cuts rates by 50 bps, as expected
* U.S. auto deal makes progress, rocky road seen in Senate
(Adds quotes, updates prices)
By Veronica Brown
LONDON, Dec 11 (Reuters) - The euro hit a six-week high against a broadly weaker dollar on Thursday with doubts creeping in as to whether pent-up demand for the U.S. currency over the year-end will be as strong as previously thought.
Implied interest rate spreads also moved in the euro's favour after European Central Bank Executive Board member Juergen Stark said late on Wednesday the bank did not have a lot of room for manoeuvre on rates after its cut last week.
Having climbed on a wave of risk aversion in recent months in tandem with the low-yielding Japanese yen, some analysts said further dollar demand into the year-end from deleveraging flows might be showing some sign of cooling.
"There was strong consensus that the requirement for dollars over the end-year period would see the dollar pushed higher, but that doesn't seem to be materialising," said Adam Cole, global head of currency strategy at RBC Capital Markets in London.
By 1045 GMT, the euro was up 1.1 percent on the day at $1.3169, having hit a six-week high of $1.3178 earlier in the session.
The single currency spiked late on Wednesday after the Stark comments, while implied euro/U.S. rate spreads reflected a cooling in ECB rate cut expectations. By contrast, the U.S. Federal Reserve is expected to cut borrowing costs again next week.
"If the euro zone is being perceived to still have rates at substantially higher levels then obviously there's a positive rate spread, but I'm not convinced that its ultimately going to be positive as the dynamics of the euro zone economy are pretty weak," Rabobank markets strategist Jeremy Stretch said.
Against a basket of currencies, the dollar was down 1.1
percent at 84.513 <.DXY>, while it also dipped 0.6 percent
versus the yen to 92.09 yen
The Swiss National Bank became the latest leading central bank to cut interest rates, but its impact was limited as the 50 basis point move paled in comparison with more dramatic reductions from other central banks last week.
The dollar traded up at 1.1920 Swiss francs compared with
1.1905 francs
CRACKS IN GLOBAL PLAN?
There was little reaction in FX markets to the approval of a $14 billion auto industry bailout plan by the U.S. House of Representatives. [ID:nN09294627]
While the House stuck to its plan, uncertainty was seen in the Senate, where a razor-thin Democratic majority cannot ensure passage. A vote could come as early as Thursday, but some Republicans have vowed to slow or even block the legislation.
Elsewhere, cracks were appearing in the global effort to drag the world out of recession on Thursday with Germany attacking Britain ahead of an EU summit for rushing into debt to bail out industries and pump up growth. [nLB344189]
In an interview with Newsweek magazine, Finance Minister Peer Steinbrueck urged governments to pause before pledging to spend billions of dollars to try to push their economies out of trouble. (Reporting by Veronica Brown; Editing by Toby Chopra)