FOREX-Euro bounces from 8-mo low vs dlr; Greece woes persist

* Talk of ECB measures buoys euro, up from 8-mth low

* Worries resurface about Greece default, banks' exposure

* G20 finance ministers say EFSF fund would be bolstered (Updates prices, adds quotes; changes dateline; previous LONDON and byline)

By Julie Haviv

NEW YORK, Sept 23 (Reuters) - The euro rose against the dollar on Friday, rebounding from an eight-month low hit the previous day amid speculation that the European Central Bank may act to address risks to growth, but fresh concerns about a possible Greek default kept investors cautious.

The euro added to earlier gains after traders cited talk of further supportive measures from the ECB.

"I don't think for political reasons they (the ECB) will lower rates right away because Draghi will need to establish credibility," said Boris Schlossberg, head of research at GFT Forex.

Mario Draghi will soon replace Jean-Claude Trichet as president of the ECB.

"But if growth remains stagnant into the end of the year, I think they could act in the first quarter," he said.

Lower rates make the euro less attractive versus higher yielding currencies, but measures to buoy the economy could act to assuage widespread market fears about a global economic recession, a reason for the recent worldwide sell-off in stocks.

Markets were jittery as Greece denied reports that one option in the debt crisis would be an orderly default with a 50 percent haircut, while Deutsche Bank (DBKGn.DE) warned European banks' writedowns on Greek bonds could exceed 25 percent. [ID:nL5E7KN1X2] [ID:nWEA5363]

A haircut for Greek bondholders could cause the euro to stage a relief rally because it would "reduce some uncertainty", Schlossberg said.

"The euro is moving tick-by-tick with risk appetite."

The euro was last up 0.3 percent at $1.3498 EUR=, rising from an eight-month low of $1.3384 struck on Thursday on trading platform EBS.

"An ECB move would show they are a little less behind the curve and closer to where they should be, which is a positive," Dan Dorrow, head of research at Faros Trading in Stamford, Connecticut. "It a battle between market perception of risk and policymaker action, but the ECB appears to be ready to move, perhaps at the next meeting."

A G20 pledge to prevent Europe's debt crisis from undermining banks and financial markets had helped the euro and other higher risk currencies recover against the dollar, but investors were concerned that more concrete action was needed.

G20 finance ministers and central bankers said the EFSF rescue fund would be bolstered and that they would take all steps needed to ease the stresses that are hampering the global financial system. [ID:nS1E78L2B5]

While the comments provided some relief, analysts said a lack of fresh measures -- either coordinated or otherwise -- could see investors crank up selling the euro and riskier assets.

"The potential for something coming out of the G20 over the weekend has people positioning pretty light," said Andrew Cox, G10 strategist at CitiFX, a division of Citigroup in New York. "Overall people are bearish on everything, not just the euro."

Prospects for the euro could look up from the middle of next week if key member states start ratifying an increase in the euro zone's bailout fund and Greece looks to edge towards securing the next tranche of its bailout funds.

The dollar index .DXY was down 0.4 percent at 78.116 after hitting a seven-month high of 78.798 the previous day.

"We clearly favour the dollar in this environment because it's become the safe-haven currency of choice," said Ken Dickson,investment director for currencies at Standard Life Investments, which has assets under management of more than $250 billion.

"There are other currencies that in the past have had some safe haven qualities, but of late, one by one they have been knocking themselves out of that race".

The dollar was down 0.1 percent at 76.18 yen JPY=, hovering near a record low of 75.941 yen hit in August. (Additional reporting by Jessica Mortimer, Anirban Nag and Naomi Tajitsu; Editing by Theodore d'Afflisio)