FOREX-Euro heads for October gain, but uncertainty curbs advance

* Euro headed for third monthly gain vs dollar, up 1.1 pct

* Dollar set to gain 2.5 pct vs yen in October -best since Feb

* Norwegian crown, Swiss franc gain versus euro

NEW YORK, Oct 31 (Reuters) - The euro edged up against the dollar on Wednesday and was headed for its third straight month of gains, but uncertainty about the heavily indebted euro-zone economies was set to limit further strength.

Gains in equity markets early in the day had lifted the euro above $1.30, but momentum faded as Wall Street turned negative and uncertainty remained about how to keep Greece afloat and when Spain may ask for a bailout.

``We still don't see any reason to be buying the euro, especially above $1.30,'' said John Doyle, currency strategist at Tempus Consulting, in Washington.

``We're looking for optimism in (Greece and Portugal) and we still don't really see it going long term. We're waiting for Spain to act, and that hasn't happened.''

The euro rose 0.1 percent to $1.2964, after hitting a session peak of $1.3021 on Reuters data. The euro was on track to post a gain of 0.9 percent this month.

Antje Praefcke, currency strategist at Commerzbank in Frankfurt said trade was quiet before a holiday in many European countries on Thursday. Traders also said the euro's gains against the dollar may be limited because of expected month-end demand to buy dollars.

Against the yen, the euro climbed 0.4 percent to 103.55 yen .

Euro-zone ministers received more bad news on Wednesday when Athens more than halved its forecast for a budget surplus before debt-servicing costs next year, dimming one of its few bright spots as rounds of austerity deepen a recession already into its fifth year.

Greece needs to push through spending cuts and tax measures worth 13.5 billion euros ($17.5 billion) as well as a raft of economic reforms to appease EU and IMF lenders, and secure bailout money to avoid bankruptcy.

In Spain, Prime Minister Mariano Rajoy does not see an urgent need to seek a rescue for government finances, a government source told Reuters on Wednesday.

A Spanish bailout is widely seen as a positive step for Europe because it would activate the European Central Bank's bond-buying program aimed at lowering borrowing costs for indebted countries.


Insurance payouts in the wake of monstrous storm Sandy could weigh on the dollar, although a rise in domestic demand for repair work could boost it.

Investors' focus began to shift to the U.S. jobs report for October, which comes days before the U.S. presidential election.

``The market has to price in quite a few variables - weaker earnings, the aftermath of Sandy, nonfarm payrolls and the U.S. elections,'' said Dean Popplewell, senior currency strategist at OANDA in Toronto.

The Labor Department said it will release the October jobs data on Friday at 8:30 a.m. (1230 GMT), as scheduled, even though the storm forced the government to shut down for two

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Employers are expected to have added 125,000 jobs to their payrolls in October, up from 114,000 in September, according to a Reuters survey of economists. The unemployment rate is forecast to tick up a tenth of a percentage point to 7.9 percent after a dramatic 0.3 percentage point fall in September.

The euro weakened 0.4 percent against the Norwegian crown to 7.395 after Norway's oil fund said it held back from selling crowns in November after buying 500 million in October.

Norway's central bank kept interest rates steady at 1.5 percent on Wednesday and said it would delay its next rate increase because it believes damage from the euro-zone crisis will keep its currency strong and slow the pace of growth.

Against the Swiss franc, the euro hit a three-week low of 1.2065 francs on trading platform EBS, with some market players citing increased repatriation flows from deleveraging by Swiss Bank UBS, which cut 10,000 jobs this week.

The Swiss National Bank cut its holdings of euros to 49 percent in the third quarter from 60.1 percent in the second, data showed on Wednesday.

The dollar was up 0.3 percent at 79.86 yen, recovering from a fall to 79.25 yen on Tuesday. For the month of October, the dollar was on track to post a gain of 2.5 percent against the yen - the best monthly performance since February.