* Euro/dollar hovers near 6 1/2-month low hit in Asia
* Greece, Portugal debt concerns mount
* Dollar supported after FOMC meet, rate rise seen this year
(Adds details, updates throughout)
By Naomi Tajitsu and Neal Armstrong
LONDON, Jan 28 (Reuters) - The euro slipped on Thursday, hovering near a 6 1/2-month low against the dollar as investors remained wary on concerns over heavily indebted smaller euro zone countries such as Greece and Portugal.
The dollar gained support after Kansas City Fed President Thomas Hoenig dissented from the Fed's pledge to keep rates low "for an extended period", bolstering the market's view that rates may start to rise later in the year. [ID:nN27180815]
Analysts warned the euro was heading for more losses as concerns rise about the grim fiscal conditions in the euro zone.
"Sentiment definitely remains negative for the euro because of the Greece problem," said Lutz Karpowitz, currency strategist at Commerzbank in Frankfurt.
"I thought the Greece story would eventually die down, but that doesn't seem to be the case, and there are more countries in the pipeline (which are facing debt problems)."
Greek government bond yields have shot up on concerns over how Athens will pay its debts. As a result, the 10-year Greek/Bund spread blew out on Thursday to its widest since Greece joined the euro in 2001.
Analysts said markets were aware other countries' fiscal positions may also be vulnerable.
Ratings agency S&P said concerns over Portugal's public finances had not abated after its budget this week. [ID:nLDE60R0GZ]
By 1120 GMT, the euro <EUR=> traded 0.1 percent lower at $1.4005. Earlier, it fell as low as $1.3930, its weakest since mid-July.
Technical traders said the euro hit that trough after it broke under its 55-week moving average at $1.3980, before a rise in global share prices prompted a turnaround in the currency. Those traders were watching for a weekly close under $1.3980 to open up fresh downside potential.
The euro <EURJPY=R> rose 0.2 percent against the yen to 126.39 yen, but stayed near a nine-month low of 125.17 yen hit on Wednesday.
The dollar was slightly higher against a currency basket <.DXY> after hitting a 5 1/2-month high of 79.066 in early trade. It held above its 200-day moving average at 78.32 following its decisive break above that level on Tuesday.
BERNANKE VOTE AWAITED
The high-yielding Australian and New Zealand dollars rose after U.S. President Barack Obama announced no new measures to punish the financial sector, sparking recovery in risk appetite.
In his State of the Union address on Wednesday, Obama focused on job creation rather than any concrete details of banking reforms [ID:nN28160833] Increased demand for risk pushed the Australian and New Zealand dollars each roughly 0.7 percent higher on the day against their U.S. counterpart.
Analysts said some investors bought back higher-risk currencies such as the Aussie and kiwi, which were sold last week when Obama's pledge to crack down on U.S. banks' risk-taking triggered risk aversion.
The New Zealand currency rose even as the Reserve Bank of New Zealand kept interest rates on hold as expected on Wednesday and reaffirmed it saw no need to raise before mid-year.
The dollar rose 0.2 percent to 90.24 yen as the Japanese currency also toiled on demand for riskier assets.
Investors awaited a U.S. Senate vote on U.S. Federal Reserve Chairman Ben Bernanke's nomination for a second term later in the day. [ID:nN27143856]
(Editing by Nigel Stephenson)