FOREX-Swiss franc slide continues; yen hovers near record

* Swiss franc down vs euro, dollar; peg seen unlikely

* Yen hovers near record, option barriers at 76.25, 76 yen

* Stock gains, U.S. retail sales data boost risk appetite (Updates prices, adds quote, details, changes byline, dateline, previous LONDON)

By Wanfeng Zhou

NEW YORK, Aug 12 (Reuters) - The Swiss franc fell sharply against the euro for a second session on Friday a day after the Swiss National Bank said it may peg the franc to halt its rally, though many analysts said such a move was unlikely.

The yen hovered near a record high versus the dollar, trading in a tight range as markets remained on alert for the possibility of intervention by Japanese officials.

The Swiss currency posted its worst day against the euro and dollar on Thursday after an SNB official said the central bank could ease monetary policy further and declined to rule out the possibility of pegging the franc to the euro.

A peg -- essentially put a ceiling on the franc -- could open the SNB to unlimited franc selling and reserve accumulation and most analysts considered the move unlikely for now. Anchoring the franc on the euro, which is plagued by debt problems in peripheral economies, could also risk destabilizing the franc itself.

"We expect the SNB to continue with its less aggressive tactics of targeting the interest rate through its target rate, the money market and even bank account interest in an attempt to create negative carry," said Camilla Sutton, senior currency strategist at Scotia Capital in Toronto.

"Should this fail we would expect official intervention would come well before the announcement of a peg."

The euro was last up 1.4 percent at 1.1007 Swiss francs , moving further away from a record low of 1.0075 set on trading platform EBS on Tuesday. Despite the latest move, the euro is still down about 12 percent against the franc so far on the year.

The dollar rose 1.2 percent to 0.7716 franc , but was still 17 percent lower on the year.

Gains in stock markets also put pressure on the safe-haven franc. U.S. stock index futures added to gains after government data showed retail sales in July posted their biggest gain since March. For details, see [ID:nCAT005492]

An increase in risk appetite boosted the euro, which last traded up 0.2 percent at $1.4261 . The euro also drew support from a rally in European shares sparked a short-selling ban on financial shares, and data showing European banks were not rushing to the European Central Bank for overnight funds.

"It's been a very hectic week with extreme volatility so the market is now looking for calmer signals," said Audrey Childe-Freeman, EMEA head of currency strategy at JP Morgan Private Bank.

"From a risk sentiment perspective it will be interesting to see if U.S. markets manage to post another positive session after the rally yesterday. But in the euro zone there is still wide range of uncertain factors, and that leaves a risk premium in place."

Against the yen, the dollar fell 0.2 percent to 76.67 , not far from an all-time low of 76.25 set on EBS in mid-March.

Traders cited option barriers at 76.25 yen and 76.00 yen, which could cushion the dollar's fall. Some said there was strong demand for short-dated dollar call options with strike prices around 78 yen to 79 yen, in case Tokyo does intervene.

Japanese Finance Minister Yoshihiko Noda said on Friday he will consider various options if one-sided moves in the yen continue. [ID:nT9E7J800K] (Additional reporting by Nia Williams; Editing by Chizu Nomiyama)