FOREX-Euro rallies vs dollar on ECB bond-buying plan

* Euro rises to two-month high versus U.S. dollar
    * ECB bond-buying plan still lacks details
    * Focus on Friday's U.S. non-farm payrolls


    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 6 (Reuters) - The euro hit a two-month peak
against the U.S. dollar in choppy trading on Thursday after the
European Central Bank unveiled a new and potentially unlimited
bond-buying program to stem the euro zone debt crisis.
    Investors have been anticipating the plan for weeks, and the
details European Central Bank President Mario Draghi announced
at a news conference were largely in line with expectations.
 
    Draghi gave few new details on the program, however,
initially disappointing investors and causing the euro to fall
sharply against the dollar. The euro later recovered as market
participants saw Draghi as delivering on his July pledge to do
whatever it takes to preserve the euro currency.
    The plan is aimed at the secondary market to address bond
market distortions and what Draghi said are "unfounded" fears of
investors about the survival of the euro.
    "The ECB announcement on bond buying has helped out the euro
and risk assets more broadly," said Greg Moore, currency
strategist at TD Securities in Toronto.
    In early afternoon trading, the euro rose 0.3 percent
to $1.2643, off the session low at $1.2559.
    "For the most part, (Draghi's comments) were positive for
the euro, but still short on some details," Omer Esiner, chief
market analyst at Commonwealth Foreign Exchange in Washington.  
   
    The euro remained within its recent 10-day range against the
dollar. Analysts at ActionForex.com said with minor euro support
of $1.2465 intact, the rebound from the July lows of $1.2040 is
expected to continue.
     Above $1.2637, investors will target $1.2764 -- the 50
percent retracement of the move from the February high of
$1.3486 to the July low of $1.2042. 
    The single currency had climbed to $1.2650 on Thursday, its
highest since early July, after the ECB kept interest rates
unchanged at 0.75 percent. Some investors had been bracing for a
rate cut to support flagging growth in the euro zone.
 
    The ECB will also offer banks easier access to central bank
loans by loosening collateral standards for debt from countries
getting bailouts or bond market support, Draghi said.
 
    Investors discounted a new forecast from the European
Central Bank staff that the euro zone economy will probably
contract more than previously expected this year. The ECB staff
also raised the bank's outlook for 2012-13 inflation.
 
    The euro could struggle to climb higher, analysts said, with
a German Constitutional Court ruling on the euro zone bailout
fund scheduled for Sept. 12, which will keep many investors wary
of initiating large positions.
    German Economy Minister Philipp Roesler said on Thursday the
European Central Bank's purchases of sovereign debt were not a
permanent solution to the region's problems and stressed that
structural reforms needed to have priority.
    
    SWISS FRANC FALLS
    The euro earlier touched a 3-1/2-month high against the
Swiss franc on the first anniversary of the Swiss
National Bank's decision to impose a floor on that pair and curb
the franc's gains. It was last up 0.1 percent at 1.2058 francs.
    The franc has fallen sharply against the euro in the past
two sessions on market talk that the SNB has been buying euros
to protect the 1.20-franc floor. The SNB has declined to comment
on the speculation.
    Against the yen, the dollar was last up 0.7 percent
at 78.90 yen, with a session peak of 79.02 yen, after solid U.S.
private payrolls and services data.
    U.S. private employers added 201,000 jobs in August,
payrolls processor ADP reported, easily beating economists'
expectations.   
    The U.S. government will release its closely watched monthly
jobs report for August on Friday.  
    The dollar broke above 79 yen to a two-week high after
separate data showed the pace of growth in the massive U.S.
services sector rose in August on a rebound in employment and
exports. 
   Sterling was last trading up 0.2 percent at $1.5939,
near a 3-1/2-month high, after the Bank of England kept interest
rates steady and its quantitative easing program unchanged, as
expected.