* Short-term euro bounce possible, but problems persist
* Thursday's ECB meeting in focus
* Chinese exports said to rise, easing global growth fear (Recasts, updates prices, adds comment, detail)
By Steven C. Johnson
NEW YORK, June 9 (Reuters) - The euro rose against the dollar for a second straight session on Wednesday, boosted by options-related demand and renewed market hopes that Europe's debt crisis may not put the brakes on global growth.
Talk that Chinese exports in May likely grew sharply bolstered confidence, while Federal Reserve Chairman Ben Bernanke said the U.S. recovery was on solid footing.
That provided traders with an opportunity to take profits on the euro's recent slide, which took it below $1.19 on Monday to its lowest level since early 2006. European and U.S. stocks also rose and the premium investors demand to hold Spanish and Italian bonds over benchmark German bunds fell.
Few were ready, however, to declare the euro's woes over. Banks' overnight deposits at the European Central Bank hit a record on Wednesday, highlighting widespread worries about the health of the financial system.
The euro was last changing hands at $1.2064, up 0.8 percent. It hit $1.1876 Monday, its lowest since March 2006.
The euro has shed nearly 16 percent against the dollar so far this year.
Steven Butler, head of FX trading at Scotia Capital, said that while the euro in the short term could reach $1.2110, "I still think there's downside.
"And overall, this move over the past few months has seen new lows hit, then consolidation and a nasty bounce back before we make another assault downward," he added.
Traders said option expiries at $1.1900 and $1.1850 added to euro demand as investors bought the currency to protect their positions.
The euro also gained against the yen, rising 0.9 percent to 110.51 yen after hitting an eight-year low beneath 109 yen on Monday. The dollar rose 0.1 percent to 91.56 yen.
The euro hit a new record trough below 1.38 Swiss francs but later recovered. The Swiss National Bank has been intervening since 2009 to limit franc strength, but traders have speculated that further intervention may prove futile given the euro's woes.
Analysts said the market was still betting that euro zone economic growth will lag growth in the United States as heavily indebted countries are forced to slash spending in exchange for access to emergency aid. The ECB is expected to keep interest rates at a record low when it meets on Thursday.
Kathy Lien, director of research at GFT Forex, said markets will watch on Thursday for clues whether the ECB plans new efforts to support troubled euro zone countries. The central bank began buying government bonds last month to cut some countries' borrowing costs.
What happens "could determine whether the euro makes a move back toward $1.19 or sustains gains above $1.20," she said.
SOME REASONS FOR OPTIMISM
The euro was also helped on Wednesday after sources said that Chinese exports grew 50 percent in May from a year earlier, which analysts said helped ease fears that Europe's debt crisis would slow global growth. Europe is one of China's largest export markets.
Some also said European efforts to cut budget deficits will be constructive for the euro in the long run.
At the Reuters Investment Summit in New York this week, Citigroup's chief currency strategist, Steven Englander, said a weaker euro will make euro zone exports more competitive, offsetting slower growth in Greece, Spain and other countries facing severe spending cuts and tax hikes.
In long run, he said, "I think time is on the side of the euro," provided countries cut budget deficits.
And unlike Europe, the United States has not been forced to address its own rising debt burden, said Brown Brothers Harriman strategist Audrey Childe-Freeman.
"This is clearly not a dollar concern at this point, but it could prove more of a bearish force for the greenback later in the cycle," she said.
The U.S. budget deficit hit $1.4 trillion, about 10 percent of gross domestic product, and could be larger this year. (Additional reporting by Neal Armstrong in London; Editing by Leslie Adler)
