* Euro relinquishes early gains, tracks losses in equities
* Euro hits lifetime low vs Swiss franc
* Investors stay jittery over euro zone debt crisis impact
(Releads, updates throughout)
By Naomi Tajitsu
LONDON, June 8 (Reuters) - The euro slipped on Tuesday, reversing early gains
as European shares fell, with concerns that euro zone debt problems would stifle
the region's economic growth keeping investors averse to risky assets.
The single European currency hovered near a four-year low hit against the
dollar on Monday. It skidded to a lifetime low versus the Swiss franc as traders
tested the resolve of the Swiss central bank to rein in strength in the domestic
European shares .FTEU3
reversed slight gains made early in the session to trade nearly 1 percent lower,
with investors risk averse and that the euro vulnerable to more losses given
"There's been a big drop in equity markets and something of a rise in general
volatility," said Peter Frank, currency strategist at Societe Generale, adding
worry over debt problems in some euro zone countries were driving short-term
Analysts said the euro gained support earlier in the day after euro zone
ministers made final arrangements on Monday to set up funds for countries facing
debt servicing problems.
But some added the ministers finalising details of a vehicle to raise up to
440 billion euros in loans had limited impact on the euro as it was widely
expected, and that the turnaround in stock prices had prompted the euro's
A widening in peripheral euro zone bond yield spreads over their safe-haven
German counterparts also weighed on the euro, analysts said.
By 1019 GMT, the euro EUR= was
unchanged on the day at $1.1920, after pulling back from a session high of
$1.1982 in earlier trade to hit the day's low of $1.1900. Against the yen
EURJPY=R the euro slipped 0.1 percent to 108.80 yen.
Some market participants said the euro may be hemmed in by options barriers
around the $1.19-1.20 region due to expire later in the day.
On Monday, the single currency fell as low as $1.1876 on electronic trading
platform EBS, its weakest since March 2006, while plumbing 108.06 yen, its
lowest in more than eight years. The euro has stayed on the back foot since its
dramatic fall late last week, when weaker-than-expected U.S. jobs data and a
warning by Hungary that it may face Greek-style debt problems led investors to
shed risky assets.
MORE EURO LOSSES?
The euro EURCHF= fell to 1.3785 on EBS, as traders took a stab at the 1.3800
francs level to see if the SNB would defend the euro at that rate.
Data on Tuesday showed Switzerland's currency reserves soared in May,
reflecting massive intervention by the central bank last month even as the franc
continued to climb against a broadly weak euro.
Analysts said the rapid rate at which the SNB has been selling the franc was
unsustainable, and that this view had helped to push the euro lower against the
Germany's government agreed to an austerity package while Hungary promised
cuts to meet budget targets, indicating more European countries were taking
steps to decrease their deficits.
Still, markets fret over the region's banking system and the impact austerity
will have on growth, and many investors expect the euro to suffer more losses in
the medium to longer term.
"The macro picture remains indicative for the euro to remain in a downtrend,
especially versus the dollar," UBS analysts said in a note.
"The outlook for weakening global growth momentum coupled with structural
problems in Europe remaining intact does not bode well for risk."
(Editing by Nigel