* Euro hits all-time lows on Aussie, near 2011 low vs USD

* Euro stays above 11-year low against yen

* Talk of euro/yen stops near Y98.50 and above Y100.50

* Rise in Asian shares supports Aussie and euro

By Masayuki Kitano

SINGAPORE, Jan 3 (Reuters) – The euro edged higher against the dollar and the yen on Tuesday but touched a record low versus the Australian dollar and looked set to remain under pressure in 2012 on worries over Europe’s debt crisis.

The euro gained a bit of reprieve as a rise in Asian equities underpinned risk appetite and spurred short-covering, helping it stay above an 11-year low against the yen touched the previous day.

Still, worries about high sovereign debt levels and lack of policy solutions to the region’s 2-year-old debt crisis were expected to push the euro lower in the coming weeks and months, even if short-covering may offer the euro some intermittent support.

“The concerns that investors have, have certainly not gone away at all,” said Callum Henderson, global head of FX research with Standard Chartered Bank in Singapore.

“The overall bias remains for more euro weakness…given the growth and debt dynamics,” he said, adding that Standard Chartered’s forecast was for the euro to fall in the next three months and to stand at $1.20 at the end of the first quarter.

The euro rose 0.3 percent to $1.2979, but stayed within striking distance of its 2011 trough of $1.2858 hit last week on trading platform EBS.

Against the yen, the euro rose 0.3 percent to 99.78 . It fell to as low as 98.71 yen in holiday-thinned trade on Monday on trading platform EBS, its lowest since December 2000.

A trader for a Japanese bank in Singapore said there were likely to be FX options-related stop loss offers at levels around 98.50 yen, while some stop-loss bids were lurking above 100.50 yen.

“Positioning among traders, especially short-term players, is tilted toward being short the euro on the crosses,” the trader said, adding that the euro might rise to around 102 yen relatively easily if short-covering gains sustain.

Earlier on Tuesday, the single currency reached a record low on the Australian dollar right below A$1.2600.

It was last at A$1.2617, having shed more than two cents in the past week. Technical charts point to further downside with a test of A$1.2500 in sight, according to a trader.

The rise in Asian shares over the weekend also gave a boost to the Australian dollar, which rose 0.5 percent against the greenback to $1.0285.

BUSY QUARTER

January starts a very busy quarter for eurozone debt issuance with Germany and France kicking off bond sales on Wednesday and Thursday, while Italy and Spain will begin their 2012 funding next week.

Investors are particularly concerned about Italy’s cost of funding in the face of around 100 billion euros of redemption and coupon payments in the first four months of the year.

“{The euro) ended last year on a downtrend, breaking key levels. Through much of last year, people were surprised how well it held up,” said Greg Gibbs, a strategist at RBS.

“Eventually it started to fall… and that will make the market more skeptical over it and hence it’s probably going to look a bit soggy at the start of the year.”

One factor that could slow the euro’s descent is market positioning, with latest U.S. Commodity Futures Trading Commission data showing that net short positions held by currency speculators swelled to a record high in the week ended Dec. 27.

The euro may also get some reprieve if European policymakers make progress on steps to tackle the debt crisis in a series of meetings in January.

France’s Nicolas Sarkozy will meet German Chancellor Angela Merkel in Berlin on Jan. 9 for talks that are likely to centre on new rules to enforce budget discipline across the European Union.

In addition, finance ministers from the EU’s 27 members will meet on Jan. 23 before their leaders hold a summit a week later.

U.S. economic data will be a focal point for this week, starting with ISM Manufacturing on Tuesday where an improvement to 53.2 is expected from November’s reading of 52.7.

It will be followed by the release of the FOMC Minutes where investors will look for signs of another round of quantitative easing. But the main event for the week will be non-farm payroll data on Friday where analysts are hoping for a robust rise of 150,000.

The dollar index stood at 80.060, off its highest level in nearly a year of 80.854 struck last Thursday.

Against the yen, the dollar dipped 0.1 percent to 76.86 yen , not that far from a record low near 75.31 yen hit in late October.

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