* Euro slips vs dollar, earlier climb loses momentum
* Dlr/yen nears pre-intervention levels, BOJ awaited
* Dlr falls to 2-1/2 yr low vs Swiss Franc
(Updates prices, adds quote, byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 4 (Reuters) - The euro fell from more than six-month high against the U.S. dollar on Monday as renewed concerns about the financial viability of euro zone banks made investors cut overly bullish bets on the single currency.
Speculative trades against the dollar swelled to $22 billion in the week to Sept. 28, the highest since at least mid-2008, Commodity Futures Trading Commission data showed. Net euro longs, on the other hand, rose about seven-fold.
Analysts said positions appeared overstretched and due for a correction.
"There are just too much short dollar positions building up so this is just consolidation and people taking profit on the euro's gain," said Kaz Shirai, FX interbank trader at Union Bank in Los Angeles.
Also weighing on the euro, Shirai said, was a news item about the need for certain European banks to increase capital levels. A Swiss-government-commissioned panel on Monday said UBS AG and Credit Suisse Group AG must hold capital well in excess of new international standards under the rules announced last month by the Basel Committee on Banking Supervision.
Overall though, the California-based trader said euro zone concerns are overshadowed by the uncertainty arising from the widely-expected second round of quantitative easing by the Federal Reserve. That should ensure the dollar's downtrend remains intact.
In early afternoon trading, the euro was down 0.8 percent at $1.3686, retreating from a peak of $1.3809 on the EBS trading platform, its highest since mid-March. Stop-loss selling was triggered around $1.3675 on to the session low of $1.3666. Good-sized bids were lined up above $1.3650 and are likely to support the euro, traders said.
WORRIES ABOUT PERIPHERAL EURO ZONE COUNTRIES
Bad news from the euro zone including those from Ireland and Greece also pressured the euro.
The Irish central bank said on Monday Ireland's economy will crawl to a virtual halt this year, defying government hopes of modest growth.
Greece, on the other hand, released a draft budget on Monday, which forecasts the economy will contract 2.6 percent next year after a 4.0 percent slump in 2010, staying in recession for a third straight year.
"The euro has come a very long way in a very short period of time and certainly Ireland and the peripheral euro zone country issues have not gone away," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange Inc in Washington.
The euro's decline helped push the dollar up against a currency basket. The dollar index rose 0.5 percent to 78.448, up from 78.029 on Friday, its weakest since January.
Against the yen, the dollar hovered near a 15-year low, fueling speculation Japan may re-enter the market to weaken its currency. The dollar traded at 83.38 yen, up 0.2 percent, but retreating from 83.88 yen hit in Asian time on EBS. Traders said stop-loss orders were suspected under 83.00 yen.
The Bank of Japan began on Monday a two-day policy meeting and was expected to extend a cheap fund-supply tool to help shore up the struggling economy.
Some market participants cited speculation any BOJ stimulus steps may be followed by more yen-selling intervention. Some analysts expect Japanese authorities to step in to sell yen if the dollar falls under 83 yen, as they did last month.
Against the Swiss franc, the dollar fell to its lowest in 2-1/2 years, falling to 0.9705 francs before recovering to 0.9722 francs, down 0.1 percent on the day.
This week sees the release of crucial U.S. jobs data while the central banks of Australia, the euro zone, Japan and the United Kingdom hold policy meetings. The International Monetary Fund and Group of Seven finance ministers also meet this week.
Ahead of these slew of events, investors are likely to trim their short dollar positions even though many in the market expect the prospect of more U.S. quantitative easing.
(Additional reporting by Nick Olivari; Editing Andrew Hay)