* Yen slides vs dollar as Japan intervenes to stem its strength * Dollar/yen off earlier highs as traders test their resolve * More intervention expected, dollar seen unlikely to sustain gains * Traders estimate around $65-75 billion of intervention By Jessica Mortimer LONDON, Oct 31 (Reuters) - The yen slid sharply against the dollar, hitting a three-month low after Japan stepped into the market to curb the currency's appreciation, though traders said more intervention would likely be needed to secure a long-lasting impact. European traders were inclined to test Tokyo's resolve, pushing it below 78 even though there had been talk of possible official bids around there. This brought it well below an earlier high of 79.55 yen on EBS trading platform. "The focus is to make it as painful as possible to hold long yen/short dollar positions," said Sebastien Galy, currency strategist at Societe Generale. "If dollar/yen continues to go aggressively lower then the Japanese authorities will feel the need to intervene again". The dollar was still shy of its 200-day moving average around 79.88 yen, though some traders speculated Japanese authorities may look to push it above 80 yen. It was last up 2.75 percent at 77.83 yen . Finance Minister Jun Azumi said Tokyo stepped into the market on its own at 1025 am. local time (0125 GMT) and would keep intervening until it was satisfied with the results. Traders estimated the Bank of Japan could have bought between $65 and $75 billion against the yen, which would be more than its Aug. 4 intervention, when it was a record $59.4 billion. The scale of the intervention demonstrated the authorities' resolve, but more was expected given substantial long yen positions in the market. Data showed speculators doubled their net long position in the yen to 54,279 contracts in the week to Oct. 25, the highest since the beginning of August. The intervention came after the dollar hit a fresh record low of 75.31 yen. "If the Bank of Japan wants to avoid the dollar slipping back quickly towards 76 yen very soon they will need to come in again to really make the point," said Niels Christensen, currency strategist at Nordea in Copenhagen. He said the authorities would want to avoid a repeat of what happened following the previous intervention in early August, when the dollar's sharp gains against the yen proved brief and it quickly dropped back down again. Some traders speculated that Japan might want to set a Swiss-style floor for the dollar/yen rate, though many were sceptical authorities could peg the yen to any particular level in the long term. The options market showed bets on yen gains against the dollar on a one-month horizon had not eased significantly, reflecting the market's belief that the impact of intervention would not last more than around 2-3 weeks. Analysts said the authorities' task could be made difficult as Japanese exporters may sell into the dollar's rally to step up their currency hedging. G20, ECB AHEAD Tokyo's latest foray followed warnings that its patience with yen strength was wearing thin, and came just days before the Group of 20 leaders' summit in France, where the euro zone debt crisis was expected to dominate the agenda. Japan will be keen to win G20 understanding that a strong yen is one challenge too many for an economy still grappling with the effects of March's massive earthquake and tsunami. The sharp rise in dollar/yen prompted across-the-board gains in the dollar, causing the euro to erase most of last week's sharp rise after a deal by European leaders to tackle the region's debt problems. An Italian debt sale on Friday saw the country pay record high yields, underscoring concerns that last week's plan leaves many issues unresolved. The euro was down more than 1 percent at $1.3994 , off a two-month high of $1.4248 hit late last week. Analysts said it could remain weak ahead of a European Central Bank policy meeting on Thursday, where an interest rate cut for December may be flagged. However, the dollar could also come under renewed pressure if U.S. policymakers announce plans to explore further easing measures to support growth after a Federal Reserve two-day policy meeting starting Tuesday. The dollar index rose 1.2 percent to 76.006 .