FOREX-Euro reverses gains, follows stocks lower

* Euro relinquishes early gains, tracks losses in equities

* Euro hits lifetime low vs Swiss franc

* Investors stay jittery over euro zone debt crisis impact

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By Naomi Tajitsu

LONDON, June 8 (Reuters) - The euro slipped on Tuesday, reversing early gains as European shares fell, with concerns that euro zone debt problems would stifle the region's economic growth keeping investors averse to risky assets.

The single European currency hovered near a four-year low hit against the dollar on Monday. It skidded to a lifetime low versus the Swiss franc as traders tested the resolve of the Swiss central bank to rein in strength in the domestic currency.

European shares .FTEU3 reversed slight gains made early in the session to trade nearly 1 percent lower, with investors risk averse and that the euro vulnerable to more losses given recent volatility.

"There's been a big drop in equity markets and something of a rise in general volatility," said Peter Frank, currency strategist at Societe Generale, adding worry over debt problems in some euro zone countries were driving short-term movements.

Analysts said the euro gained support earlier in the day after euro zone ministers made final arrangements on Monday to set up funds for countries facing debt servicing problems.

But some added the ministers finalising details of a vehicle to raise up to 440 billion euros in loans had limited impact on the euro as it was widely expected, and that the turnaround in stock prices had prompted the euro's retreat.

A widening in peripheral euro zone bond yield spreads over their safe-haven German counterparts also weighed on the euro, analysts said.

By 1019 GMT, the euro EUR= was unchanged on the day at $1.1920, after pulling back from a session high of $1.1982 in earlier trade to hit the day's low of $1.1900. Against the yen EURJPY=R the euro slipped 0.1 percent to 108.80 yen.

Some market participants said the euro may be hemmed in by options barriers around the $1.19-1.20 region due to expire later in the day.

On Monday, the single currency fell as low as $1.1876 on electronic trading platform EBS, its weakest since March 2006, while plumbing 108.06 yen, its lowest in more than eight years. The euro has stayed on the back foot since its dramatic fall late last week, when weaker-than-expected U.S. jobs data and a warning by Hungary that it may face Greek-style debt problems led investors to shed risky assets.

MORE EURO LOSSES?

The euro EURCHF= fell to 1.3785 on EBS, as traders took a stab at the 1.3800 francs level to see if the SNB would defend the euro at that rate.

Data on Tuesday showed Switzerland's currency reserves soared in May, reflecting massive intervention by the central bank last month even as the franc continued to climb against a broadly weak euro.

Analysts said the rapid rate at which the SNB has been selling the franc was unsustainable, and that this view had helped to push the euro lower against the Swiss currency.

Germany's government agreed to an austerity package while Hungary promised cuts to meet budget targets, indicating more European countries were taking steps to decrease their deficits.

Still, markets fret over the region's banking system and the impact austerity will have on growth, and many investors expect the euro to suffer more losses in the medium to longer term.

"The macro picture remains indicative for the euro to remain in a downtrend, especially versus the dollar," UBS analysts said in a note.

"The outlook for weakening global growth momentum coupled with structural problems in Europe remaining intact does not bode well for risk."

(Editing by Nigel Stephenson)