July 29, 2010 –   * Euro hits 11-wk high $1.3073, $1.3050 barriers broken

* Investors buy euros before month-end, c.bank demand seen

* Dollar index hits three-month low 81.675

By Naomi Tajitsu

LONDON, July 29 (Reuters) - The euro hit an 11-week high against a broadly weak dollar on Thursday as month-end demand for the single currency helped push it beyond a key barrier.

Market participants said some Asian central banks were buying the euro, helping to push the dollar to a three-month low versus a currency basket.

By 0826 GMT, the euro had climbed 0.7 percent on the day to $1.3073 according to electronic trading platform EBS, its highest since May 10.

Gains in the euro helped push the dollar down to 81.675 versus a currency basket, its weakest since late April.

"There are a lot of orders in the $1.3050 area which had been targeted. When those were triggered it made for a higher euro/dollar," said Lutz Karpowitz, strategist at Commerzbank in Frankfurt.

"It's a matter of technical factors that is driving the market today."

Data showing a slide in Germany's unemployment rate to 7.6 percent in July, adding to other recent upbeat data on Europe's biggest economy, also helped to support the single currency.

Other analysts added that investors who had been wary of buying the euro before last week's bank stress test results had resumed picking up the single currency before the month ends, while position adjustments would also work in the euro's favour.

"A lot of people are still covering short positions in the euro, and that will continue," said John Hydeskov, senior currency analyst at Danske in Copenhagen.

Analysts said ongoing optimism about second-quarter U.S. corporate earnings would add to the view of an improving global economy, which would support shares and keep euro demand intact. European stocks rose 0.5 percent in early trade.

$1.3125 IN FOCUS

Stop-loss orders in the euro above $1.3050 helped to accelerate the euro's move higher, traders said, while more orders were seen lined up through $1.3080.

Analysts said euro support was growing around $1.30, as the single currency has managed to end New York trade and begin the Asian session around that level every day so far this week.

With the $1.3050 level broken, investors focused on whether the euro can extend its rally to $1.3125, the 38.2 percent Fibonacci retracement of the single currency's peak-to-trough move from November 2009 to June.

Against the yen, the euro rose 0.3 percent to 113.92 yen, recovering from early losses and edging towards 114.74 yen struck on trading platform EBS on Wednesday.

The euro had slipped in Asian trade due to month-end selling by Japanese exporters, Tokyo-based traders said, adding that more offers were likely to emerge if the euro rebounds and rises towards 115 yen.

The dollar dipped 0.2 percent to 87.16 yen, and posted bigger losses against sterling, which hit a five-month high, and the Australian and New Zealand currencies.

Some in the market said that an announcement by California Governor Arnold Schwarzenegger that the U.S. state was in a state of emergency over its finances was another reason to dump the dollar as it highlighted fiscal problems in the country.

The New Zealand dollar rose 0.8 percent to $0.7275 after the central bank raised interest rates by a quarter point although it warned further hikes could be more gradual.

The Australian dollar rose more than 1 percent to $0.9027, inching closer to an 11-week high hit earlier in the week, with traders citing talk of huge buying by a U.S. investment house. (Editing by Susan Fenton)