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 hovered near record lows against the safe-haven Swiss franc and yen after Standard & Poor's cut Washington's AAA sovereign rating on Friday, bolstering the view that political wrangling may tarnish the ultra-secure status of U.S. assets. Traders said the ECB bought Spanish and Italian debt early in the European session after it said on Sunday it would "actively implement" its 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. "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 single currency broke below reported stop loss orders at $1.4230 to hit a session low around $1.4205, reversing an early rally to $1.4400 as European shares fell 1.6 percent . The euro also broke below support at its 21-day moving average around $1.4245 and further falls could see it target Friday's low around $1.4054. "The bias continues to remain for a move lower whilst in the $1.4000/1.4500 range of the past few weeks; however the support just above the 200-week moving average at $1.4030 remains a tough nut to crack," said Michael Hewson, analyst at CMC Markets. A hit to higher-yielding currencies and gold soaring to a record high also showed investors were selling risky assets for safer ones. Trading in the euro remained volatile, with one-month euro/dollar implied vol rising to its highest of the year, while one-month risk reversals , which track the skew between options to buy or sell the currency, remained 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 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 than the euro versus a range of currencies. The dollar index was steady at 74.634. "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. Goldman held its euro/dollar forecast at $1.45 for 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 0.7 percent to 77.84 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 0.7620 Swiss francs , in sight of a record low around 0.7480 plumbed earlier in the day. The U.S. currency has shed more than 9 percent against the Swiss franc since the start of July 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. (Additional reporting by Jessica Mortimer; Editing by John Stonestreet)

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