Euro Coal-Dollar fall boosts prompt prices, swaps

* Mar S.African trades sharply higher at $108.75

* Swaps boosted by utility hedging, oil

LONDON Jan 26 (Reuters) - The U.S. dollar fell to its lowest for almost two months on Thursday, giving a sharp boost to coal prices which have sagged this month due to weak fundamentals globally.

Two March loading South African cargoes traded early in the day at $108.50 and $108.75, up over $3.00 from Wednesday, bought by banks and traders, sold by a large, international trading house.

Coal swaps rallied on Thursday, bolstered by European utilities hedging dark spreads (the profit margin from using coal to generate power) and oil's rise, despite the lack of physical buying and high stockpile levels.

End-users in Europe and Asia remained noticeable for the absence from the market.

Whether China resumes large-scale spot buying after the New Year holidays is absolutely critical for coal price direction, regardless of the gyrations of the swaps market, traders said.

China overtook Japan as the world's largest coal importer last year after a surge in imports in the last quarter to a total of 182.4 million tonnes, nearly 11 percent up from the previous year, much of it bought on a spot basis.

"Show me anyone who wants to actually take delivery of this coal at these prices rather than cover a short position or as part of an API4 and Newcastle swaps play," one major European trader said.

Dollar-denominated commodities including oil and copper tend to rise in price when the dollar weakens but the latest gains wee capped by a rise in U.S. weekly jobless claims .

The Federal Reserve's pledge to keep interest rates low until the end of 2014 lessened the currency's appeal for international investors.

"The dollar got hammered overnight and that's pulled commodities up including coal, but the swaps, particularly the Calendar years, have risen even more," one European trader said.

TRADES

Two March loading South African cargoes traded at $108.50 and $108.75 a tonne, a rise of over $3.00.

PRICES

A February South African cargo was bid at $107.00, having been offered at $104.00 on Wednesday.

An April South African cargo was bid at $105.00 and offered at $108.50, up $1.00 on the bid.

A February DES ARA cargo was offered at $104.00, little changed.

An April DES cargo was bid at $105.00 and offered at $108.50. (Reporting by Jacqueline Cowhig, editing by William Hardy)