* Euro steadies from multi-month lows vs dollar, yen
* Euro flat at $1.3960; $1.4000 options eyed
* EU's Almunia says Greek bailout not possible
* Dollar index hits 5-month high; U.S. GDP eyed
(Adds quotes, updates prices)
By Neal Armstrong
LONDON, Jan 29 (Reuters) - The euro steadied after hitting
multi-month lows on Friday as uncertainty over U.S. GDP data led
to squaring up of short positions, while concerns over Greece
still lurked in the background.
The U.S. economy is expected to have grown at an annualised
4.6 percent in the fourth quarter, double the rate in the third
quarter. The data is due out at 1330 GMT.
"The market has stabilised before we go into the U.S. GDP
number later today and I think that's going to drive the next
leg of the price action," said HSBC director of currency
strategy Paul Mackel.
"Uncertainty over this number is huge and that is one of the
reasons why we're see profit taking."
Investors this week had heavily sold Greek and other euro
zone peripheral bonds on concerns whether they could grapple
with their huge fiscal deficits.
EU Monetary Affairs Commissioner Joaquin Almunia said Friday
an EU bailout for Greece was not possible, sparking a widening
in the premium investors demand to hold 10-year Greek government
bonds rather than benchmark German bunds. []
The Financial Times had earlier quoted high-level EU
officials as saying Greece would in the last resort receive
emergency support from other euro zone governments and the
European Commission.
Official support was still likely, said Credit Suisse
currency strategist Ray Farris, despite Almunia's comments.
"If the Greeks fulfil their commitments, EU assistance will
be easier to give. There is official support, but none of it is
unconditional and the bulk of the heavy lifting has to be done
by Greece."
EURO STILL PRESSURED
The single European currency was flat on the day at $1.3970
<EUR=>, recovering from an early drop to $1.3912 on trading
platform EBS, its weakest since mid-July.
Traders eyed whether the pair would end above or below its
55-week moving average of around $1.3983. They also cited large
options with strike price of $1.4000 expiring later in the day
and influencing price action.
Still, the euro was on track to fall some 7 percent against
the dollar since December.
Against the yen, the euro hit a nine-month low of 124.81 yen
on EBS. It was last up 0.5 percent at 126.10 yen.
The euro also tumbled against the Swiss franc, dropping to
1.4645 francs <EURCHF=R>, its lowest since last March, the month
the Swiss National Bank first intervened to counter franc
strength.
Wariness of Swiss central bank intervention capped a further
rise in the Swiss franc, traders said.
The dollar index <.DXY>, a measure of its performance
against six other major currencies, touched a five-month high at
79.156. It was last trading flat at 78.929.
"The dollar rally is about weakness elsewhere and it likely
has further room on the upside," said Credit Suisse's Farris.
The dollar rose 0.4 percent at 90.25 yen <JPY=>, recovering
from a session low of around 89.59 yen. It had hit a six-week
low of 89.14 yen on Wednesday.
The yen's gains were trimmed as dollar buying emerged
related to Japanese investment trusts, known as toushin, a
trader at a Japanese brokerage said.
The U.S. Senate on Thursday backed Ben Bernanke for a second
four-year term running the Federal Reserve, but by the stiffest
opposition to any nominee for Fed chairman in the nearly 32
years the Senate has voted on the position. []
(Additional reporting by Tamawa Desai; Editing by Toby Chopra)
