FOREX-US dollar climbs to 6 1/2 month high vs euro

* Greece debt woes mount; Germany, France deny aid report

* US durable goods orders weaker than expected

* Yen up as carry trades closed on risk aversion

* Markets await US Senate vote on Bernanke second term (Updates prices, adds detail, comment, changes byline)

By Steven C. Johnson

NEW YORK, Jan 28 (Reuters) - The U.S. dollar reached a 6-1/2 month peak against the euro on Thursday as investors remained anxious about the fiscal health of Greece and other smaller euro zone countries.

Markets also awaited a U.S. Senate vote on Federal Reserve Chairman Ben Bernanke's nomination for a second term. Polls show he is likely to win approval [ID:nN27143856].

The euro fell to $1.3938 , its worst showing since mid-July, as investors worried Greece may not be able to service its debt, putting pressure on the euro and raising fears the country could be forced out of the euro zone. It last traded at $1.3979, down 0.3 percent on the day.

Germany and France denied a report suggesting an imminent European Union bailout for Greece, while Athens said it had not requested help and was the victim of speculators intent on attacking it as the euro zone's "weak link."[ID:nLDE60R1FE]

Adding to pressure on the euro pressure were warnings by credit ratings agencies that Portugal needs a clear plan for further budget cuts beyond 2010 to prevent downgrades. [ID:nLDE60R16L]

"There are a lot of troubling debt situations in Europe, in Greece and beyond, and that is hurting the euro," said Melvin Harris, strategist at Easy Forex in New York.

The premium investors demand to hold Greek government bonds rather than benchmark German Bunds rose to its highest since the euro was launched more than a decade ago.[ID:nLDE60R24B]

The cost of insuring Greece's sovereign debt against default also hit a record high.[ID:nLDE60R1E7]

Debt worries could push the euro as low as $1.35 in the coming weeks, Harris said, while sterling, which fell 0.2 percent to $1.6133 suffered after Standard & Poor's said Britain's banking system was no longer one of the world's most stable.[ID:nWNA2743]

The U.S. dollar fell 0.2 percent to 89.84 yen as losses on Wall Street prompted investors to close riskier trades financed by cheap borrowing in the yen. The euro dropped 0.4 percent to 125.62 yen after hitting a nine-month low of 125.07 yen.

Some analysts though said the Greek debt worries were overdone and that the euro was just staging a technical retreat after running up strongly in 2009, when it rose above $1.51.

"If the euro is getting punished because of the problems with Greece, the U.S. dollar should be getting punished because of the problems in California," said Chuck Butler, president of Everbank World Markets in St. Louis. "California is the eighth largest economy in the world," he said.

Investors, he said, appear to be "using the Greece thing as an excuse to just do a correction of the currency's run since March last year."

Analysts said the likely approval of Bernanke for a second term atop the Fed would do little to rattle currency markets.

The U.S. dollar had earlier gained on Wednesday after the Fed left interest rates steady near zero on Wednesday but Kansas City Fed President Thomas Hoenig dissented, wanting the U.S. central bank to eliminate a phrase vowing to keep rates exceptionally low for "an extended period."

This bolstered the view that rates may start to rise later this year, which would boost the value of dollar-denominated assets. [ID:nN27180815]

(Additional reporting by Wanfeng Zhou)