FOREX-Euro weighed by contagion worries; Aussie eyes parity

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* Euro struggles after 3 days of decline

* Fitch warning on U.S. banks adds to contagion fears

* Aussie under pressure, eyeing parity vs USD

SYDNEY, Nov 17 (Reuters) - The euro wallowed at five-week lows versus the dollar and yen in Asia on Thursday as bond market turmoil spread across Europe (Chicago Options: ^REURUSD - news) , sparking calls for the European Central Bank to intervene more forcefully in markets.

Investors were also nervously watching to see how German financial markets will react after Moody's cut the ratings of 12 German public-sector banks, believing they are likely to receive less federal government support if needed.

The euro stood at $1.3441, versus $1.3492 late in New York, and was not far off Wednesday's trough around $1.3430 -- a low not seen since Oct (KOSDAQ: 039200.KQ - news) . 10. Support is seen at $1.3399, a level representing the 76.4 percent retracement of the October rally, ahead of $1.3375, the 78.6 percent retracement.

Souring the mood further, Fitch warned it may downgrade its "stable" outlook for U.S. banks, because of contagion from problems in troubled European markets.

"While U.S. banks have been under scrutiny for some time over their exposure to Europe, an explicit warning from the ratings agency amplified market concerns over the extent and impact of contagion," said analysts at BNP Paribas (Other OTC: BNPQF.PK - news) .

French borrowing costs continued to rise on Wednesday and ECB buying of Italian and Spanish debt failed to reassure markets. There were also growing signs of strain in money markets, with euro zone banks finding it harder to obtain dollar funding.

However, Germany remained resolutely opposed to letting the central bank take a bigger role in resolving the debt crisis, even though many analysts believe the only way to stem the contagion is for the ECB to carry out the sort of quantitative easing undertaken by the U.S. and British central banks.

All these factors helped drive the dollar index to its highest level in five weeks. The index was at 78.366, having risen as high as 78.397 on Wednesday.

As usual, commodity currencies bore the brunt of the dip in risk appetite with the Australian dollar shedding another cent to reach a five-week low at $1.0050, from Wednesday's high of $1.0185.

"The AUD/USD remains under downward pressure and could try to push under parity to a support pivot point of $0.9986 in the near term," said Besa Deda, chief economist at St. George Bank.

Among the G3 currencies, dollar/yen remained a sea of calm as the danger of more intervention by Japan (EUREX: FMJP.EX - news) kept markets wary. Dollar stood at 77.05 yen, having carved out a slim trading range roughly between 76.80 and 77.20 since the Oct. 31 intervention.

There is no major Asian economic data on Thursday, leaving the focus firmly fixed on developments in Europe.

The new Italian prime minister is expected to present an austerity programme to the upper house on Thursday, while Athens is thrashing out a deal with private bondholders to cut its public debt, sources say. (Editing by Wayne Cole)

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FOREX-Dollar holds firm as bank funding worries grow

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* USD benefits from mounting risk aversion

* Aussie hit, back below parity vs USD

* Worries grow as European bank funding condition tightens

SYDNEY, Nov 18 (Reuters) - The U.S. dollar held firm in Asia on Friday, while the euro was surprisingly resilient with European banks seen repatriating funds back home as signs of funding stress grew amid a deepening euro zone debt crisis.

The spotlight fell on Spain on Thursday, which had to pay the highest rate to sell its 10-year debt since 1997, just shy of the 7 percent mark seen as unsustainable. Even then, it could not raise the full target amount.

"The slow motion train crash continues, with USD funding now clearly a bigger issue as contagion spreads more deeply into Spain," said Sebastien Galy, strategist at Societe Generale (Paris: FR0000130809 - news) .

The euro was at $1.3462 versus $1.3459 late in New York, having recovered from a five-week low of $1.3421 plumbed on Thursday. Support for the common currency was seen around $1.3400, the 76.4 percent retracement of the October rally.

That saw the dollar index retreat slightly from a five-week peak of 78.467 to 78.282. The dollar, however, gained sharply against commodity currencies such as the Australian dollar, which are normally sold in times of market stress.

As a result, the Aussie fell below parity for the first time since Oct (KOSDAQ: 039200.KQ - news) . 12. It stood at $0.9986, having touched $0.9973 overnight.

"While risks to the downside appear more apparent, it's worth noting that the currency is now oversold on several momentum-based indicators," said David Scutt, a trader at Arab Bank Australia in Sydney.

"Keeping this in mind, should any good news surrounding Europe (Chicago Options: ^REURUSD - news) hit the screens, it's likely to see the Aussie spring higher on the back of short covering."

Against the yen, the dollar was steady near 77.00 yen , with investors wary of further Japanese action in the wake of the massive $100 billion intervention on Oct. 31.

Following a Fitch Ratings report released this week highlighting concerns over U.S. banks' exposure to euro zone debt, banks are showing little willingness to lend to one another, raising the risk that the debt crisis will turn into a credit crunch.

The premium for swapping euros into dollars rose on Thursday, with the three-month cross-currency basis swap around 6 basis points wider at -136 basis points, the most since the 2008 financial crisis.

German Finance Minister Wolfgang Schaeuble said on Thursday the euro zone's debt crisis was beginning to hit the real economy and urged vigilance to prevent contagion from infecting banks and insurance firms.

News out of the euro zone was mixed on Thursday, although Italy showed progress. The country's new prime minister announced sweeping reforms including a crackdown on tax evasion and changes to the tax system in order to dig the country out of crisis.

Athens, however, saw anti-austerity protesters clash with police.

Many analysts still believe the only way to help contain the contagion is for the ECB to buy up large quantities of bonds, effectively the sort of 'quantitative easing' undertaken by the U.S. and British central banks.

But Berlin continued to resist, saying European Union rules prohibit such action. (Editing by Ed Davies)

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FOREX-Euro falls for 3rd day vs dollar on debt worries

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* Euro hits five-week low, eyes Oct (KOSDAQ: 039200.KQ - news) . trough around $1.3140

* ECB's buying Italian bonds fails to bring down yields

* More euro losses seen as crisis spreads to core Europe (Chicago Options: ^REURUSD - news) (Updates prices, adds comment, details, changes dateline, previous LONDON)

NEW YORK (Frankfurt: A0DKRK - news) , Nov 16 (Reuters) - The euro fell for a third straight session against the dollar to hit a five-week low on Wednesday as rising French and Italian borrowing costs heightened worries about contagion in the euro zone debt crisis.

The European Central Bank's buying of Italian and Spanish bonds brought only temporarily relief and yields resumed climbing after the intervention stopped as investors doubted how much the ECB can buy to support the bond market.

Analysts expect the euro to remain under pressure in the near term as troubles in the periphery spread to core nations in Europe and as policymakers remain behind the curve in finding a solution to the region's debt problems.

"The outlook for the euro is worsening gradually because clearly there's been contagion in the euro zone debt markets," said Samarjit Shankar, managing director of global FX strategy at BNY Mellon in Boston.

The euro fell 0.3 percent to $1.3493 , having earlier dropped as low as $1.3427 on Reuters data, the weakest level since Oct. 10.

The common currency also came under pressure after Italian bank Unicredit (MDD: UCG.MDD - news) said it would ask the ECB to extend its access to funding, stoking concerns about the health of euro zone banks. [ID:nL5E7MG1ZJ]

"We are likely to stay in a fairly stressed environment until banks and asset managers have sufficiently deleveraged," said Sebastien Galy, currency strategist at Societe Generale (Paris: FR0000130809 - news) in London. "It continues to suggest that euro/dollar is steadily heading for the $1.3140 October low."

Traders said the euro's latest decline was driven by selling from macro funds. Against the yen, the single currency slipped 0.3 percent to 103.93 yen, having fallen as low as 103.37 yen, its lowest since Oct. 10.

ECB purchases initially pushed Italian yields down to around 6.83 percent and sparked a rebound in the euro. But yields later climbed back above 7 percent, a level widely deemed unsustainable.

In a sign that the debt crisis is spreading to the core, the yield spread between French 10-year government bonds over German Bunds rose to its highest since the euro's launch in 1999. France is the second-largest economy in the euro zone.

ECB ROLE

France and Germany, Europe's two central powers, clashed over whether the European Central Bank should intervene to halt the euro zone's accelerating debt crisis as modest bond purchases failed to stop the rout.

A French government spokeswoman said the ECB's role is to ensure the stability of the euro, but also the financial stability of Europe. But German Chancellor Angela Merkel made clear Berlin would resist pressure for the central bank to take a bigger role in resolving the debt crisis. [ID:nL5E7MG3AP]

In Italy, Mario Monti formed a new technocrat government on Wednesday, but analysts were cautious as to whether the move would be enough to calm financial markets.

"A new government is coming in Italy but there's still no improvement on bond markets so it's hard to see what can be done in the short term to reverse this," said Lutz Karpowitz, currency strategist at Commerzbank (Other OTC: CRZBF.PK - news) in Frankfurt.

Some in the market see further downside for the euro as funding strains among European banks are evident with euro/dollar three-month cross currency basis swap spreads widening to a level not seen since late 2008.

Against the yen, the dollar slipped 0.1 percent to 76.99 , while the dollar rose 0.3 percent to 78.132 against a basket of currencies . (Additional reporting by Naomi Tajitsu in London; Editing by Dan Grebler)

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