* Euro rebounds on renewed Greek loan deal hopes
* Also buoyed by stop-loss buying -trader
* Yen hits 6-1/2 mth low vs euro, 7-1/2 mth low vs dlr
By Masayuki Kitano and Ian Chua
SINGAPORE/SYDNEY, Nov 22 (Reuters) - The euro hit a 6-1/2 month high against the yen on Thursday, supported by revived hopes of a Greek loan deal, while investors gave the yen a wide berth on expectations of more forceful monetary easing in Japan.
Investors had initially sold the euro on Wednesday after international lenders failed to reach a deal to release emergency aid for Greece, but quickly reversed those trades after German Chancellor Angela Merkel said a deal was still possible next Monday when they meet again.
After having regained its footing the previous day on Merkel’s comments, the euro got an added boost in Asia on Thursday on stop-loss buying, which helped lift the single currency to 106.27 yen, its highest level since early May.
The euro last traded at 105.94 yen, up 0.1 percent from late U.S. trade on Wednesday. Against the dollar, the euro edged up 0.1 percent to $1.2846, up a full cent from the previous day’s low near $1.2735.
The yen fell broadly and touched its lowest level since April against a number of currencies, including the dollar and the Australian dollar.
The dollar has climbed roughly 3.9 percent against the yen in the last seven trading sessions, with the yen dented by market expectations that the likely next Japanese government would push the Bank of Japan to implement more drastic monetary stimulus.
Analysts say the yen’s weakness could persist going into an election in Japan next month.
“Markets remain firmly focused on the prospects for a more aggressive post-election BOJ monetary policy stance, implying that the yen is likely to remain vulnerable in the near term,” BNP Paribas strategists wrote in a client note.
“But we emphasize again that previous BOJ asset purchases have not been successful at weakening the yen on a sustained basis,” they said, adding the recent sharp rise in the dollar against the yen should reverse in the coming months.
The dollar rose to as high as 82.59 yen on trading platform EBS, the greenback’s highest level against the Japanese currency since early April, and last traded at 82.49 yen, down 0.1 percent from late U.S. trade on Wednesday.
Shinzo Abe, the leader of Japan’s opposition Liberal Democratic Party, which holds a commanding lead in opinion polls ahead of the Dec. 16 election, has called for “unlimited” easing until 2 or 3 percent inflation is achieved, as well as pushing short-term interest rates below zero.
Such rhetoric from Abe may persist until a new government is formed and weigh on the yen, said Daisuke Karakama, market economist at Mizuho Corporate Bank in Tokyo.
“The mood among people outside of Japan is probably that they don’t want to grab the yen right now,” Karakama said.
It is hard to come up with reasons to expect a drop in the dollar against the yen at this point, although the greenback could retreat if worries about a fiscal crisis in the United States intensify, he added.
At issue is whether U.S. lawmakers will reach an agreement to avoid the so-called fiscal cliff of spending cuts and tax hikes due to take effect in early 2013.
The Australian dollar rose 0.2 percent to $1.0391. Earlier, it touched an intraday high of $1.0401 on an upbeat survey of Chinese manufacturing activity.
HSBC’s China flash Manufacturing Purchasing Managers Index rose to a 13-mth high of 50.4 in November, a sign the pace of growth in Australia’s single biggest export market has revived after a slowdown.
The Aussie dollar rose to as high as 85.78 yen, its strongest level since early April, and last traded at 85.68 yen , up 0.2 percent on the day.