By Gertrude Chavez-Dreyfuss NEW YORK, July 5 (Reuters) - The euro slid against the dollar and the Swiss franc on Tuesday after six days of gains as weak euro zone data and concerns over China weighed on sentiment and boosted currencies viewed as safe havens. The euro's losses, however, could be capped ahead of Thursday's meeting of the European Central Bank, which is expected to hike interest rates. A signal that the ECB would further tighten this year would also support the euro. Worries about Greece have not totally faded, though, despite the approval by euro zone finance ministers of a 12-billion-euro loan that will help it avert an immediate default. "The euro gave up its gains from last week. There is some risk aversion in the market due to some soft euro zone PMI and retail sales data," said Mark McCormick, currency strategist at Brown Brothers Harriman in New York. "Greece is totally not out of the picture as well, and there is also the possibility that China may raise rates." Greece suffered a setback on Monday after credit rating agency Standard & Poor's warned it would treat a rollover of privately held Greek debt, now being discussed, as a selective default. [ID:nL6E7I408N] Greece also needs a second aid package worth some 110 billion euros, which euro zone finance ministers said would be made final by mid-September. The euro earlier dropped 1 percent against the safe-haven Swiss franc EURCHF=EBS to a low of 1.22059 francs, pulling back from a five-week high hit on Monday of 1.23460 on trading platform EBS. It was last down 0.9 percent at 1.22200, with stops cited below 1.22 francs. The euro was down around 0.5 percent against the dollar at $1.44600 EUR=EBS, taking a breather from recent gains made after Greece approved tough austerity measures last week. The euro had gained more than 2 percent against the greenback last week in its best weekly performance since January. On Monday the euro hit a one-month high versus the dollar at $1.45800. Traders cited talk of stops through $1.44400-$1.44500 ahead of bids $1.44300/$1.44350. Falls in the euro accelerated after the Markit Eurozone Purchasing Managers' Index showed growth in the euro zone's dominant services sector slowed to its weakest pace since October. Euro zone retail sales data was also lower than forecast, all of which tempered investor appetite for riskier currencies.[ID:nL9E7I4005] [ID:nLDE7640H3]. Investors, however, were unlikely to push the euro lower before Thursday's ECB policy meeting, An ECB rate increase has been well factored in by the market, with the benchmark German/U.S. spreads within about 10 basis points of the recent high, analysts said. Shaun Osborne, chief currency strategist at TD Securities in Toronto, said the extent to which the German/U.S. spreads can improve further hinges on the language that ECB President Jean-Claude Trichet uses at his post-meeting press conference, with investors focused on what he says about inflation. "Dropping the reference to 'strong vigilance' would signal a short pause at least in the tightening cycle and likely see the euro rally fade again," he said. Earlier, Chinese media reports about a possible rate rise in China this weekend and a report by rating agency Moody's saying the scale of problem loans to local governments in China may be much bigger than previously thought also hurt risk appetite, lifting the dollar as well. [ID:nL3E7I507Y] The ICE dollar index .DXY, which tracks the greenback's performance against a basket of major currencies, bounced off Monday's near one-month lows to trade at 74.529, up 0.3 percent. The U.S. dollar also received additional overall support against the Australian dollar after the Reserve Bank of Australia kept its key cash rate unchanged at 4.75 percent, citing sluggishness in the economy outside the booming mining sector. The Aussie dollar slipped below its 55-day moving average to as low as US$1.0664 AUD=D4, its lowest since June 29, before recovering to US$1.0692, down 0.4 percent for the day. (Editing by Leslie Adler)

Source