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Aussie & NZ dlrs hold gains on euro, on defensive vs USD

Tuesday, 9 Oct 2012 | 9:23 PM ET

WELLINGTON/SYDNEY, Oct 10 (Reuters) - The Australian and New Zealand dollars held gains on the euro on Wednesday but were on the defensive elsewhere as concerns over Spain continued to simmer and sap risk appetite.

* Euro steady but nursing hefty losses at A$1.2618 , following large overnight liquidations of euro long positions.

* It has slipped 1.6 pct since a four-month peak of A$1.2824 on Friday. Charts look bearish after euro failed to hold above A$1.2800. Key support seen at A$1.2575/85, the 10-day MA and Oct 3 low.

* Likewise, euro dips to NZ$1.5772 vs the kiwi, more than 1 percent lower in three sessions.

* Euro hurt due to uncertainty regarding Greece and Spain. European Central Bank chief Mario Draghi told a European Parliament committee that Greece has made progress on reforming its economy, but has more work to do.

* Antipodeans retreat against a broadly stronger U.S. dollar with the Aussie at $1.0190, from $1.0203 early, not far from a three-month trough of $1.0149 hit on Monday.

* Aussie touched a high of $1.0259 on Tuesday, underpinned by a 12 pct surge so far this week in spot iron ore prices .

* Support seen around $1.0175, then $1.0150, while sellers lined up around 100-DMA of $1.0249.

* NZ dollar falls to a one-week low at $0.8145, from $0.8174 early. Last at $0.8154 with next support found near $0.8135, the 55-DMA and the Sept 10 high, with $0.8190 capping the topside.

* Kiwi down 1.5 pct vs the greenback so far this month, compared with Aussie's 1.7 pct drop. Markets expect more rate cuts in Australia vs steady rate outlook in NZ.

* Also weighing on risk appetite is a slowdown in China and subdued economic data in Australia. Investors now focused on Australia's jobs report due out on Thursday.

* The Reserve Bank of Australia (RBA) warned on Tuesday the labour market could be softer than suggested by the low jobless rate. A disappointing report would add to the case of further easing following a 25 basis points-cut to 3.25 pct last week.

* Interbank futures pricing implies a 64 percent chance of another quarter of a point cut next month.

* Australian consumer sentiment survey shows a modest improvement for October with people happier about their finances and on buying a new home.

* Muted response in markets after NZ's budget deficit halved in the 2011/12 fiscal year but the improvement was still less than expected, underscoring the government's challenge of returning to surplus in three years. ID:nL3E8L81TH]

* Finance Minister Bill English, who is overseas, did not make specific mention of the government's plan to return the budget to surplus by 2014/15, but did say spending cuts were needed to achieve a surplus.

* NZ government bonds hold gains, with yields still down 1 basis point along the curve.

* Australian government bond futures flat with three-year contract at 97.650, and the 10-year contract at 97.035.

((Australia/New Zealand bureaux)(+61 2 9373 1800/+64 4 802 7980))

Keywords: MARKETS AUSTRALIA NEWZEALAND/FOREX