* Euro falls more than 1 pct vs dollar and yen
* Russian banks to ask to postpone foreign debt - Nikkei
* Russia bank industry official says Nikkei report "untrue"
* Focus on Geithner to outline bank bailout later Tuesday
By Kaori Kaneko
TOKYO, Feb 10 (Reuters) - The euro fell sharply against the dollar and the yen on Tuesday after a media report said Russian banks will ask Moscow to renegotiate with foreign banks to postpone repayment on up to $400 billion of loans.
Traders said the report in Japan's Nikkei business daily had caused market players to sell the European single currency, with investors nervous about the euro zone's economic ties to Russia and European banks' lending exposure to the country.
The Nikkei quoted Anatoly Aksakov, president of the Russian Association of Regional Banks, as saying the industry group had submitted a proposal to the Russian government.
But the euro later trimmed some losses after Aksakov told Reuters that the Nikkei report saying the industry body had submitted a corporate debt restructuring plan to the government was untrue.
"As banks in Europe have a close relationship with Russia, the report raised worries about their losses which hurt the euro," said Yuichiro Nakamura, a dealer at Shinkin Central Bank, referring to the Nikkei report.
The euro fell 1.1 percent to $1.2858. It had stood around $1.2825 before Reuters reported Aksakov's comments.
Against the yen, the euro fell 1.3 percent to 117.41 yen.
The euro fell to as low as $1.2810 and 116.65 yen on trading platform EBS earlier in the day.
"As was the case last week when Fitch downgraded Russia, bad news about Russia basically becomes a factor for the euro to fall," said Takahide Nagasaki, chief foreign exchange strategist for Daiwa Securities SMBC.
Fitch Ratings downgraded Russia's sovereign rating to BBB last Wednesday and said further cuts were possible due to low commodity prices, high capital outflows, melting reserves and corporate debt problems.
Investors were also keeping an eye on developments over a U.S. bank bailout plan, expected to be unveiled by Treasury Secretary Timothy Geithner later on Tuesday.
Markets are looking to the U.S. financial stabilisation and economic stimulus packages to help the distressed economy and markets.
Three sources told Reuters the Obama administration's bank rescue package included a public-private partnership that could buy up to $500 billion worth of distressed assets, with private investors able to buy bad assets through low-cost funding from the Fed or using Federal Deposit Insurance Corp guarantees.
They also said the bailout plan does not include a stand-alone, government "bad bank" to buy distressed assets.
"Uncertainty over the financial stabilisation plans has not been dispelled ... The question will be which private institutions will buy bad assets. So the details are still unclear," Nakamura said.
President Barack Obama said on Monday he was unsure if the government would need more than the remaining $350 billion of bailout funds to restore the U.S. financial system.
The dollar dipped 0.1 percent against the yen to 91.37 yen. (Additional reporting by Charlotte Cooper, Masayuki Kitano; Editing by Chris Gallagher)