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FOREX-Euro's rebound gains fade as sentiment deteriorates

Published 06/08/2010, 08:43 PM

* Euro gives ground but still above 4-yr low of $1.1876

* Aussie, kiwi off rebound highs vs yen, dlr as shares fall

* Euro slips towards latest record low of 1.3746 Swiss francs

By Charlotte Cooper

TOKYO, June 9 (Reuters) - The euro remained fragile on Wednesday, although it held above a recent four-year low on the dollar, and higher-risk currencies such as the Australian dollar gave back gains as Asian share markets fell.

The euro also remained near an all-time trough against the Swiss franc, set on Tuesday below 1.38 francs, with the Swiss National Bank declining comment on whether it intervened to weaken the franc.

European Central Bank chief Jean-Claude Trichet speaks later in the day ahead of an ECB meeting on Thursday which the market will watch for more signals or steps to ease strains from the euro zone's debt crisis or support the economy.

German 10-year bond yields fell to a record low on Tuesday as investors sought the safety of the euro zone benchmark paper on continued worries about fiscal woes in euro zone countries and Britain, after a warning to the UK from ratings agency Fitch.

"Despite the substantial (euro zone) policy package and the details we have got on that, European bond markets continue to show signs of stress and that suggests the euro can fall further from here," said John Horner, FX strategist Deutsche Bank in Sydney.

The euro slipped to $1.1945, down 0.3 percent from New York trading levels but above Monday's four-year low of $1.1876.

Chart focuses for the market are expected options triggers around $1.1850 and a low set in early 2006 at about $1.1825. Horner said Deutsche Bank expected the euro to slide to $1.15 over the coming few months.

The euro slipped 0.4 percent from late U.S. levels to 109.10 yen after gaining 0.5 percent on Tuesday.

The Australian dollar, which bounced more than 2 percent against the yen in the previous session, fell 0.7 percent to 75.16 yen, its losses deepening as Asian share markest opened and headed lower.

The Aussie also lost ground to the U.S. dollar after climbing more than 2 percent on Tuesday. It slipped 0.3 percent to $0.8230.

The U.S. dollar index, a measure of its performance against six other major currencies, slid 0.2 percent to 88.261, below a 15-month peak of 88.708 on Monday.

The dollar eased 0.2 percent to 91.30 yen. (Editing by Edwina Gibbs)

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