FOREX-Euro slips as French-German proposal fails to excite

* Sarkozy, Merkel push proposals, but disappoint

* German, euro zone data undershoots, weighs on euro

* Fitch affirms U.S. credit rating

(Updates prices, adds quotes, changes byline)

By Julie Haviv

NEW YORK, Aug 16 (Reuters) - The euro dropped against the dollar on Tuesday as highly anticipated proposals from French and German leaders failed to shore up investor confidence in the euro zone.

French President Nicolas Sarkozy and German Chancellor Angela Merkel proposed a tax on financial transactions and closer joint governance of economic policy to stop the debt crisis in Europe. They did not propose an increase to the euro zone bailout fund or selling euro zone bonds. For story [ID:nLDE77F0SN] Highlights [ID:nL5E7JG1YQ]

The proposals disappointed as they did not address problems in France, nor the fact the European Financial Stability Facility does not have enough resources to buy debt, or ways to rekindle growth, said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.

"This does not seem to be a game-changer or a show-stopper," he said. "Market participants went into this summit with low expectations and they certainly met those low expectations."

In early afternoon New York trade, the euro was trading at $1.4392 EUR=, down 0.4 percent, with support at its 100-day moving average around $1.43511. The euro hit a nearly three-week high of $1.44779 on Monday.

Not all in the market were so hard on the proposals.

The press conference laid the groundwork for a European Fiscal Union, according to Douglas Borthwick, managing director at Faros Trading in Stamford, Connecticut.

"The ingredients must be gathered before the pie is baked, and this is exactly what France and Germany are lining up with their discussions," he said. "While the market may be less excited about the comments, we are."

"Europe is moving towards Fiscal Union, that we can be assured of."

The euro had earlier traded above $1.44 while the greenback rose to session highs versus the yen after Fitch Ratings maintained the United States' AAA credit rating, with a stable outlook. [ID:nN1E77F0FW].

Dismal economic data weighed on the euro. Data released on Tuesday showed gross domestic product in Germany -- the euro zone's largest economy with standout performance among industrialized nations -- grew marginally in the second quarter and well below the consensus forecast. [ID:nLDE77F03P]

GDP data from the euro zone also painted a bleak picture. [ID:nLDE77F0DU]

The euro gained against the Swiss franc to trade up 0.6 percent at 1.1398 francs EURCHF=. The Swiss National Bank was earlier rumored to be checking rates in the currency forward market; it later declined to comment.[ID:nWEA0783]

The Swiss franc slid against the dollar and euro the last few sessions on speculation the Swiss National Bank may take drastic measures to curb gains in the currency by setting a cap on the franc and pegging it to the euro. [ID:nL5E7JE04T]

The dollar fell 0.1 percent against the yen to 76.72 yen JPY=, near levels seen before Japan's yen-selling intervention on Aug. 4 and hovering near a record low of 76.25 yen hit in March. The greenback earlier hit session highs after the Fitch news.

(Additional reporting by Gertrude Chavez-Dreyfuss, Nick Olivari and Steven C. Johnson; Editing by Andrew Hay)