* Euro down 0.4 pct at $1.3312 <EUR=>
* Traders reverse year-end gains
* Worries about euro zone debt weigh on euro
* Friday's U.S. jobs, Bernanke remain key
(Adds quotes, updates prices)
LONDON, Jan 3 (Reuters) - The euro fell against the dollar
on Monday in the first trading session of 2011, reversing
year-end gains on persisting concerns about euro zone debt.
Thinned trade due to holidays in Tokyo and London added to
volatility.
"There has not been any really dramatic news out of Europe
today, and the market is still illiquid. Bond market spreads
could be a bit of a burden for the euro," said Lutz Karpowitz,
senior currency strategist at Commerzbank in Frankfurt.
"The U.S. ISM figures could provide some support for the
dollar," he added. The Institute for Supply Management's
December non-manufacturing index is forecast to rise to 56.9
from 56.6 in November.
By 1143 GMT, the euro traded at $1.3312 <EUR>, having hit a
session low around $1.3251, and down from around $1.3377 in late
U.S. trade on Friday.
Bids below $1.33 supported the pair, while offers were seen
above $1.3350, keeping the upside limited, traders said.
Some traders said the euro found a footing as European
equities rose some 1 percent on the day <> after earlier
euro selling by macro funds.
The euro climbed last week as bears gave up their positions,
frustrated by the currency's firm support at its 200-day moving
average just below $1.31. Rises gained steam on Friday after
stop-loss bids were triggered.
Many analysts see further downside for the euro.
"We expect the euro to trade below $1.30 for most of the
first quarter," said Roberto Mialich, currency strategist at
Unicredit in Milan, adding peripheral euro zone debt issuances
in the early part of the year could be a catalyst for the shared
currency to fall.
The dollar edged up 0.3 percent against the yen to 81.44 yen
<JPY=>, having touched an eight-week low of 80.93 yen on trading
platform EBS earlier on Monday.
"Without an upside surprise in the (U.S.) job data this
week, dollar/yen is likely to come under renewed pressure,"
analysts at BNP Paribas said in a note.
U.S. nonfarm payrolls due out on Friday are seen rising
126,000 in December, a Reuters poll showed. U.S. Federal Reserve
Chairman Ben Bernanke's congressional testimony scheduled for
Friday will also be closely watched.
The dollar rose 0.2 percent against the Swiss franc at
0.9355 francs <CHF=>, after dropping to an all-time low of
0.9301 on Friday.
The euro fell 0.2 percent versus the Swiss franc to 1.2458
francs <EURCHF=>, not far from the euro's record low against the
franc of 1.2398 francs hit last week.
(Editing by John Stonestreet/Ruth Pitchford)
