-- Broad euro slide sends Swiss franc soaring
-- SNB seen in the market buying euros to defend floor, traders say
-- Spain jitters drive euro lower across the board
-- GBP falls after manufacturing data disappoints
LONDON (Dow Jones)--The euro sank in European trading Thursday, touching multi-week lows against other major currencies and briefly breaching the Swiss National Bank's floor at CHF1.20 for the first time since its introduction last September.
The euro fell below CHF1.2000 against the Swiss franc on the EBS trading platform via CQG shortly after 0930 GMT, slipping to as low as CHF1.1990 in thin pre-Easter holiday trading.
Market participants said the move was triggered by stops around the CHF1.2030 level and came after the euro slid against the dollar, pound and yen in an extended reaction to Wednesday's disappointing Spanish bond auction as yields on benchmark Spanish bonds rose to levels last seen before European Central Bank's first three-year long-term refinancing operations.
"The LTRO effect of keeping peripheral bond yields down is definitely behind us... So we're likely to see a period of stress in bond markets and some weakness in the euro but I wouldn't want to extrapolate this week's weakness into Armageddon," said London-based chief currency strategist Kit Juckes at Societe Generale.
Traders said the Swiss National Bank bought euros in the market shortly after its floor was breached, helping the single currency to move back up to CHF1.2016 by 1056 GMT.
In the aftermath, the Swiss National Bank reiterated that it will do its utmost determination to keep the floor in place by buying foreign currency in unlimited quantities.
"It will be difficult for momentum to build for investors to start positioning against the floor," said Michael Sneyd, a currency strategist at BNP Paribas.
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