FOREX-Euro skids toward fifth weekly fall but selling pressure eases

Updates to mid-session in Asia

By Tom Westbrook

SINGAPORE, Oct 9 (Reuters) - The euro was headed for a fifth straight weekly drop on Friday, though there were signs the selling streak was losing momentum as France's tumbling debt market stabilised and a decline in US yields took some steam out of the dollar's rally.

The common currency EUR= had hit a 17-month low of $1.1161 on Monday on market worries about France's record high debt load and the difficult political path to budget cuts, in contrast with a robust-looking US dollar and US economy.

It has since recovered to trade at $1.1226, for a fall this week of 0.1% and a five-week drop of more than 3% on the dollar.

The euro/sterling cross EURGBP= is also down 0.2% on the week to trade near a 16-month low at 84.77 pence. The euro/Swiss cross EURCHF= has steadied around 0.9322 francs per euro after notching last week its biggest weekly fall in 17 months.

"My take is all the moves are pretty stretched," said Matt Simpson, senior analyst at StoneX in Brisbane.

"You probably only get two or three big moves a year on the euro and this has been one of them... but bearish momentum is waning (and) I'd tread really carefully at these lows."

France's far-right presidential candidate Marine Le Pen presented plans this week to cut the budget deficit, which markets took as reassuring given hard-left rival Jean-Luc Melenchon has asked the central bank to cancel government debts.

French students blockaded high schools and marched through cities on Thursday in the latest wave of protests about education conditions, highlighting the tricky balance for leaders between demand for social spending and leery markets.

"France's bond sell-off and the social unrest are now operating in a feedback loop," said Macquarie strategists Thierry Wizman and Gareth Berry in a note to clients.

"An intensification of the street riots could lead to higher bond yield spreads."

Elsewhere, the dollar dipped slightly in the Asia session to put the brakes on recent gains as US yields headed for their biggest weekly drop in about three months.

The Australian dollar AUD= rose 0.2% to $0.6975 and sterling GBP= rose 0.1% to $1.3243.

The New Zealand dollar is flirting with its longest losing streak in more than four years, should New Zealand's relatively low rates drag it to a seventh straight weekly decline.

The kiwi NZD= was last up about 0.2% to $0.5614 and flat for the week.

The yen JPY= headed for a fourth straight weekly drop, though moves in the last three of those weeks have been very small as it has steadied around 158 yen to the dollar.

Vishnu Varathan, head of Asia-Pacific macro strategy at Mizuho Securities in Singapore, said the dollar sat in a "precarious pole position, flattered by a dismal euro and yen."

(Reporting by Tom Westbrook; Editing by Jamie Freed and Kim Coghill)