* Euro sheds early gains made on ECB bond buys * Analysts see limited impact from bond buying, fiscal issues remain * Dollar suffers, S&P downgrade tarnishes U.S. safe-haven status By Naomi Tajitsu LONDON, Aug 8 (Reuters) - The euro shed early gains against the dollar and fell versus other currencies on Monday as initial relief over European Central Bank purchases of Spanish and Italian government bonds fizzled out in the face of a further selloff of risky assets. The U.S. currency slipped across the board, hovering near record lows against the safe-haven Swiss franc and yen, after a cut by Standard & Poor's to Washington's AAA sovereign rating on Friday bolstered the view that political wrangling may tarnish the ultra-secure status of U.S. assets. Traders said the ECB was seen buying Spanish and Italian debt early in the European session after it said on Sunday that it would it would "actively implement" its controversial bond-buying programme. But the purchases did little to lift the negative sentiment that has enveloped financial markets on concerns the euro zone's debt crisis is spreading to core countries, and analysts said they see more room for the euro to fall. The single currency hit a session low around $1.4240, reversing an early rally to $1.4400, as European shares fell more than 2 percent . A hit to higher-yielding currencies while gold soared to a record high also suggested that investors were selling risky assets for safer ones. Analysts expected investors would remain negative on the single currency as bond purchases, while adding temporary liquidity to stressed bond markets, would do little to solve the region's fiscal problems. "There's a recognition that just buying Italian or Spanish bonds isn't in itself enough to alleviate the structural problems of either economy," said Jeremy Stretch, currency strategist at CIBC Markets. The euro traded around $1.4263, after its slide was tempered by Asian sovereign demand around the day's low, while more bids were eyed around $1.4230. The 21-day moving average around $1.4245 was also seen providing some initial technical support. But trading in the currency remained volatile, with one-month euro/dollar implied vol rising to its highest of the year, while one-month risk reversals , which tracks the skew between options to buy or sell the currency, remain strongly in favour of selling euros. The euro fell more than 1 percent on the day versus the safe-haven franc and the yen , hovering within range of a lifetime low versus the Swiss currency. FRANC, YEN RALLY The dollar index slipped 0.2 percent to 74.49, and some analysts said the S&P downgrade highlighted their view that the dollar will remain weak, adding that they saw room for the U.S. currency to depreciate more versus a range of currencies, compared with the euro. "Our hunch is that the external pressure on the euro is a lot less than the external pressures on the dollar," said Thomas Stolper, currency strategist at Goldman Sachs. "As soon as there is a loss of confidence (in the U.S.), foreigners stop buying U.S. assets. It's also the same as in Europe, but the U.S. has a large current account deficit to fund, whereas Europe doesn't. "That means that the pressure on the euro on the margin is not as dramatic as on the dollar. This is the primary reason why the euro hasn't weakened more," he said. Goldman held its euro/dollar forecast at $1.45 in the next three months, while it sees the pair rising to $1.50 in six months. It sees more dollar weakness versus the yen, lowering its three-month dollar/yen forecast to 77.00 yen from 82.00, and sees the U.S. currency falling to 74.00 yen in a year's time. The dollar fell 1 percent to 77.60 yen on Monday, having slipped to around 77.45 on the EBS trading platform in early Asian trade. It was down roughly the same amount at 0.7602 Swiss francs , hovering in range of a record low around 0.7480 plumbed earlier in the day. Over the past month the U.S. currency has shed some 6 percent against the Swiss franc and about 4 percent against the yen as investors have ploughed into those currencies on the view they offer the most security from a darkening economic outlook and worries over U.S. and European sovereign debt. Demand for the franc and the yen kept alive the threat of intervention by Swiss and Japanese authorities to weaken their currencies, whose strength eats into their exports. Market participants expect Japanese authorities will re-enter the market if the dollar falls to 77.10 yen -- the level at which it sold yen for dollar last week. (Editing by John Stonestreet)

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