* Euro gains after Merkel and Hollande comments
* U.S. Q2 GDP data not as weak as feared
(Reuters) - The euro climbed to a three-week high against the dollar on Friday as German Chancellor Angela Merkel and French President François Hollande spoke of their readiness to do anything to safeguard the euro zone.
"Germany and France are deeply committed to the integrity of the euro zone. They are determined to do everything to protect the euro zone," they said in a joint statement, which echoed comments a day earlier by European Central Bank chief Mario Draghi..
In a volatile session, the dollar rose against the yen and briefly pared losses against the euro on Friday after the Commerce Department reported that U.S. economic growth slowed, as expected, in the second quarter. The gross domestic product number may not be enough to push the Federal Reserve to pump more money into the economy in the near term, according to some strategists.
The main focus remained the fiscal debt crisis in the euro zone and the efforts to stem it.
"They are going to have to back it up at some point, but investors are not going to stand in the way of the European Central Bank and governments in the short term," said Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, New Jersey.
The euro was last up 0.7 percent at $1.2364, closer to the session peak of $1.2377 than the session low of $1.2240.
The euro touched the low after the German central bank said it remained critical of the ECB's bond-buying program and reiterated its opposition to giving a banking license to the euro zone's bailout fund.
It reversed that loss after France's Le Monde newspaper reported the ECB and governments were preparing to intervene in financial markets to help bring down Spanish and Italian borrowing costs..
The euro also was helped by Germany's Finance Minister Wolfgang Schaeuble saying on Friday he welcomed the pledge by the ECB's Draghi to take all necessary measures to save the euro.
On Thursday, the euro rose after a pledge by Draghi to do whatever it took within the bank's mandate to preserve the single currency.
Analysts said Draghi's comments sent a strong signal that the ECB could take steps to rein in soaring Spanish and Italian borrowing costs, though a lack of details might limit the euro's gains.
The bank, which meets next week to decide on interest rates and discuss policy measures, has previously bought government bonds in the secondary market to push yields lower.
Earlier this month, the ECB cut interest rates to support economic growth. But pressure is building on it to do more as peripheral euro-zone governments are struggling to implement tough austerity measures.
Elsewhere, European policymakers are working on "last chance" options to bring Greece's debts down and keep it in the euro zone, with the ECB and national central banks looking at taking significant losses on the value of their bond holdings, officials said..
And Spain's deputy prime minister said on Friday there won't be any full-scale bailout of the country. It was not an option being looked at and was not possible, the official said. .
SLOW U.S. GDP GROWTH
The dollar maintained gains it posted against the yen after the U.S. economic growth data despite the euro's gyrations.
U.S. gross domestic product expanded at an annual rate of 1.5 percent in the April-June period, the weakest pace of growth since the third quarter of 2011, the Commerce Department said. .
While many are not expecting the Fed to move immediately, it may eventually opt for a third round of quantitative easing in the form of large-scale bond purchases, known as QE3, or cut the interest rate it pays banks on the excess reserves they leave with the central bank.
But Friday's U.S. economic growth data may at least delay the Fed. Increasing the supply of dollars would be negative for the currency.
"The GDP data was at the margin fractionally stronger than expected and plays perfectly to the pre-release thinking that the Fed can wait for more clarity on the economy from the next two employment reports before enacting (or not) additional QE measures at the September FOMC meeting," said Alan Ruskin, head of G10 FX strategy at Deutsche Bank in New York.
The dollar gained 0.4 percent against the yen, trading at 78.53 yen, with a one-week high of 78.64 yen. The euro was up 1.1 percent against the yen, trading at 97.09 yen, with a session peak of 97.29 yen, its highest since July 18. It was well above a 12-year low touched earlier this week.
The euro has gained 1.7 percent against the dollar this week, its best weekly performance since Feb. 26. The dollar posted a narrow weekly gain of 0.1 percent against the yen, its first weekly gain in five weeks.
Stronger risk appetite helped the Australian dollar to a three-month high on Friday against the U.S. dollar. The Australian dollar was last up 0.3 percent at US$1.0430.
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