Aussie & NZ dlrs bounce on euro, bonds in demand

* Aussie at one-week highs vs euro

* Australian govt sells A$3.25 bln bonds

* Australian job data out on Thursday a key risk

By Gyles Beckford and Cecile Lefort

WELLINGTON/SYDNEY, Oct 10 (Reuters) - The Australian and NewZealand dollars bounced on the euro on Wednesday and held offlows against the U.S. dollar, with a whopping sale of Australianlong-dated bonds helping attract demand.

The Antipodeans regained some ground against a soggy eurowith the Aussie rising to a one-week high of A$1.2563, moving away from four-month lows hit last week.

The euro was undermined by large liquidations of long europositions as uncertainties about Spain and Greece resurfaced.

The common currency has slipped 1.6 percent against theAussie since Friday to last fetch A$1.2566. Charts indicate moredownside after the euro failed to hold above A$1.2800.

Key support was seen at A$1.2512, the 61.8 percent of theSept-Oct bounce with A$1.2625 providing initial resistance.

The euro dipped to NZ$1.5717 versus the kiwi,showing a 1 percent loss in three sessions to last trade atNZ$1.5729.

The euro decline dragged the Antipodeans higher across theboard, even against a broadly stronger U.S. dollar.

The Aussie edged up to $1.0220 , from $1.0203 inearly trade, moving away from a three-month trough of $1.0149hit on Monday.

A 12 percent surge so far this week in spot iron ore prices

and an oversubscribed sale of long-datedgovernment bonds by the Australian government helped underpinthe local currency.

Having tripped light stops above $1.0220, next resistance isseen at $1.0250 with support at $1.0175.

Investors were now focused on Australia's jobs report dueout on Thursday.

The Reserve Bank of Australia (RBA) warned on Tuesday thelabour market could be softer than suggested by the low joblessrate. A disappointing report would add to the case of furthereasing following a 25 basis points-cut to 3.25 percent lastweek.

Interbank futures pricing implies a 60 percentchance of another quarter of a point cut next month.

"The jobs report will be the catalyst for the Aussie's nextmove," said a trader at a European bank in Singapore, expectinga break on either side of $1.0150 and $1.0270.

An Australian consumer sentiment private survey showed amodest improvement for October with people happier about theirfinances and on buying a new home.


The New Zealand dollar paused around $0.8166, aftertouching a one-month low of $0.8145.

Selling of the kiwi against the Aussie was seenas an added weight on the kiwi on top of the more generalisedstrength for the U.S. dollar.

"We've seen quite a strong rebound in the iron ore price,that's part of it, with some profit taking on the cross whichhas been quite heavily one way for the past month or six weeks,"said ASB Bank's head of institutional FX sales, Tim Kelleher.

Iron ore is Australia biggest export earner.

"Kiwi looks like it's slightly on the defensive...I don'tthink it's going anywhere fast, but it's pointing to a weakernight," Kelleher said.

Short term support for the kiwi was seen at around $0.8134,the 50 percent retracement of the September rally, and belowthat back towards $0.8100, while $0.8220 was seen capping thetopside.

Markets were unmoved by data showing the New Zealandgovernment posted a budget deficit of NZ$9.2 billion for the2011/12 fiscal year. That was half the previous year's deficitbut still short of expectations, showing how tough it will be toget back into surplus in three years. ID:nL3E8L81TH]

"The direction of change in the fiscal accounts - shrinkingdeficits - will be important to the rating agencies and moreimportant than the precise timing of any return to surplus,"said BNZ economist Doug Steel.

New Zealand government bonds gave up most of theopening gains to close flat, although there was a slight bidtone at the long end of the curve.

Australian government bond futures edged lower withthree-year contract 0.03 points lower at 97.620 and the10-year contract 0.02 points off at 97.015.

((Australia/New Zealand bureaux)(+61 2 9373 1800/+64 4 8027980))