* Dollar/yen drops to 15-year low
* Euro extends all-time low versus Swiss franc
* Little euro chart support until 1.2700 vs Swiss franc
* Market frets over euro zone banks, sovereign debt (Adds quote, details, updates prices, changes dateline, previous LONDON)
By Nick Olivari
NEW YORK, Sept 8 (Reuters) - The yen struck a fresh 15-year high against the dollar and the Swiss franc hit an all-time peak versus the euro on Wednesday as concerns about euro zone banks and sovereign debt prompted a flight to safety.
Concerns about how Ireland deals with the troubled Anglo Irish Bank and Germany's announcement that it will not back a euro rescue fund forever highlighted problems in weak euro zone countries, trimming demand for risky assets.
Persistent buying by investors seeking a temporary refuge in the yen helped push the greenback through a major option trigger below 83.50 yen, again testing the Japanese authorities' pain threshold for strength in their currency.
"Not surprisingly, more rhetoric from Japanese policymakers has been unleashed, though the legitimacy of such talk is still in question until we see some actual action," said Sacha Tihanyi, currency strategist at Scotia Capital in Toronto.
Bank of Japan Governor Masaaki Shirakawa reiterated his reluctance to return to quantitative easing although he indicated the central bank was weighing its options. Finance Minister Yoshihiko Noda again warned he would take decisive action if necessary. [ID:nTOE687026]
"The growth and changing nature of fx since the Japanese last intervened should dampen their hopes for now. The speed of the move will be the cue ... My fresh target for dollar/yen is now 79.50 and for euro/yen 104.50," a London trader said.
The dollar fell to 83.34 yen on electronic trading platform
EBS
It later recovered to 83.84 yen
The euro fell 0.5 percent to 105.80 yen
The euro was little changed at $1.2683
SWISS FRANC IN DEMAND
The euro has dived from a three-week high of $1.2920 hit on
Monday on EBS
Adding to these worries was German Chancellor Angela Merkel's comment on Tuesday that Berlin will not support prolonging rescue mechanisms to underpin the euro indefinitely because it would damage the single currency. [ID:nLDE6861FU]
Ireland's cabinet was nearing a decision on how to deal with Anglo Irish. [ID:nLDE6870JU] and [ID:nDUB003235].
The euro's losses were limited as it found support at the 100-day simple moving average around $1.2670. Technical analysts saw the next support at $1.2605, the 50 percent retracement of the euro's May-to-August rally.
Analysts said a significant move below $1.27 required fresh downward impetus.
"We've had a lot of negative chatter (about euro zone banks) in the past few days, but no new, concrete news," said Peter Frank, currency analyst at Societe Generale in London.
"For the euro to keep weakening, we need confirmation of bad news, not just chatter from the local press," he said, adding the next big risk for the euro was Hungary, which must find a way to plug a gaping hole in its 2010 budget.
The euro fell to a record low versus the Swiss franc of
1.2765 francs on EBS
"There's real safe-haven demand for the Swiss, and the euro is suffering from a shift back on to issues in the euro zone banking sector," said Manuel Oliveri, currency strategist at UBS in Zurich.
Elsewhere the Bank of Canada raised its key interest rate by 25 basis points to 1 percent as expected. The U.S. dollar was last down 0.5 percent at C$1.0426 compared with the C$1.0486 it traded at before the announcement. (Additional reporting by Neal Armstrong in London, Editing by Chizu Nomiyama)