FOREX-Euro falls, stung by doubts about EFSF powers

* Euro hits day's low vs dollar on doubts about EFSF powers

* German EconMin: lawmakers unwilling to leverage fund

* Dollar supported broadly on month-end rebalancing demand

By Naomi Tajitsu

LONDON, Sept 30 (Reuters) - The euro slipped to a session
low versus the dollar on Friday on doubts about the firepower of
a strengthened euro zone bailout fund, leaving it on track for
its biggest monthly loss in ten months.

Month-end demand boosted the dollar as market participants
said non-U.S. fund managers needed to buy the currency after a
sell-off in equity markets this month required them to cut back
their dollar hedging positions.

Comments from Germany's economy minister that its lower
parliamentary house did not seem willing to approve higher
limits for the EFSF bailout fund knocked the euro to the
day's low of $1.3488, relinquishing gains made on Thursday when
lawmaker voted to approve a beefing-up of the fund.

Sentiment towards the euro remains negative as many
investors are still betting on a Greek debt default, while
demanding more measures to prevent Athens's debt problems from
spreading to other countries.

"It could be that month-end demand for USD is the main cause
of the euro's sogginess, though the German vote by no means
solves all of Europe's problems," CitiFX Wire analysts said in a
note.

The euro fell 0.7 percent on the day, but selling
petered out ahead of $1.3480, as traders suspected big stop-loss
sell orders below that level.

The dollar rose versus a currency basket, lifting its
trade-weighted index 0.3 percent to 78.255 .

Market participants saw a need for investors to buy dollars
against the yen, sterling and the Australian and Canadian
currencies later in the day for month-end adjustment purposes.

The dollar traded 0.2 percent lower at 76.70 yen, but
it pulled away from a session low of 76.49 hit in Asian trade,
where traders in Tokyo had cited selling by Japanese exporters.

Investors took in their stride comments by Japanese Finance
Minister Jun Azumi, who said Japan will boost its currency
intervention fund by 15 trillion yen ($195 billion) through a
third extra budget for the fiscal year to next March.

The New Zealand dollar fell roughly 1 percent on the day to
a six-month low of US$0.7627 after Standard & Poor's
followed Fitch Ratings in downgrading the country's sovereign
debt by one notch.

BAD MONTH FOR EURO

The euro is poised to end September 6 percent lower against
the dollar, its worst monthly performance since November.

Jitters over the spiralling European debt crisis, European
banks' exposure to sovereign debt and a slowing global economy
caused investors to slash their bets on risky assets in the
July-September quarter, sending the common currency down almost
10 cents versus the dollar over the period.

Euro zone finance ministers meet next week to discuss more
ways to help Greece, but few in the market are expecting
aggressive measures to ring-fence other countries should Athens
default on its debts.

"We don't expect any concrete decisions from next week's
Eurogroup meeting. But we could get a positive statement that
policymakers will help the euro zone periphery, which could help
sentiment," said You-Na Park, currency strategist at Commerzbank
in Frankfurt.

She said any euro gains on such optimism would likely be
capped around $1.37.

(Additional reporting by Asia Forex Team; Editing by John
Stonestreet)