* 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 later trimmed its gains, and last traded at 105.96 yen, up 0.1 percent from late U.S. trade on Wednesday. Against the dollar, the euro edged up 0.2 percent to $1.2849, up a full cent from the previous day’s low near $1.2735.
The yen dipped to its lowest level since April against a number of currencies, including the dollar and the Australian dollar.
The U.S. dollar has climbed roughly 3.9 percent against the yen in the last seven trading sessions, with the yen weakened by market expectations that the likely next Japanese government would push the Bank of Japan to implement more drastic monetary stimulus.
Shinzo Abe, the leader of Japan’s opposition Liberal Democratic Party, which holds a commanding lead in opinion polls ahead of an election on Dec. 16, has called for “unlimited” easing until 2 or 3 percent inflation is achieved, as well as pushing short-term interest rates below zero.
Analysts say the yen’s weakness could persist going into the election next month.
“Obviously it’s based on the fact that if Abe wins, it’s all going to be further easing and further measures to weaken the yen,” said Andrew Robinson, FX analyst for Saxo Capital Markets in Singapore. “I think we have a bit further to go.”
The dollar rose to as high as 82.59 yen, the greenback’s highest level against the Japanese currency since early April, and last traded at 82.46 yen, down 0.1 percent from late U.S. trade on Wednesday.
“The mood among people outside of Japan is probably that they don’t want to grab the yen right now,” said, Daisuke Karakama, market economist for Mizuho Corporate Bank in Tokyo.
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.
Optimism on the U.S. budget front has grown after leading U.S. legislators recently expressed confidence that they could reach a deal to avert the so-called fiscal cliff of spending cuts and tax hikes due to take effect in early 2013.
For now, traders said there was talk of dollar offers in the 82.80 yen to 83.00 yen area, with one trader citing talk of profit-taking interest at levels near 82.80 yen.
The Australian dollar rose 0.2 percent to $1.0386. 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 stood at 85.61 yen , up 0.1 percent on the day.