By Neal Armstrong LONDON, Oct 4 (Reuters) - The euro hit a nine-month low against the dollar and a 10-year low against the yen on Thursday, as euro zone policymakers failed to quell rising concerns over a Greek debt default, hitting riskier currencies and boosting the greenback. The dollar rose to a nine-month high against a basket of currencies with the market gripped by worries that Europe's debt crisis could substantially damage the global economy. Euro zone finance ministers are reviewing the size of the private sector's involvement in a second international bailout package for Greece, while an agreement to push back the next aid tranche for Athens until mid-November heightened investor concerns over the threat of a debt default. Despite ever deeper cost-cutting measures, Greece admitted on Monday that it will miss its fiscal deficit target this year, sparking fresh doubts over further international aid. "The tone for the euro is sour after the failure of the euro zone finmins to bring anything concrete to the table with respect to Greece," said Jane Foley, senior currency strategist at Rabobank. "The market is increasingly worried about the potential of the Greek crisis and the calamity that could be created if there was a messy default," she added. Shares in Franco-Belgian financial group Dexia plummeted on Tuesday over its exposure to Greece and reports that the lender will soon be split up, showing the potential for the Greek crisis to impact the wider banking system. The euro hit a nine-month low against the dollar of $1.3145 as option barriers at $1.3150 were eroded. Traders reported stronger demand located around large $1.3100 barriers. Technical traders said the outlook for the common currency had turned increasingly negative after a bearish cross on the 50 and 200-day moving averages, while support was seen at $1.3040, a 61.8 percent retracement of the rally from $1.1876 in June 2010 to $1.4940 in May 2011. "The bailout plan appears to be pushed to the limit. It seems even as if policymakers needed some time to discuss an orderly default," said Makoto Noji, senior strategist at SMBC Nikko Securities. The euro also hit a 10-year low of 100.77 yen but some analysts said extreme short positioning for the euro could limit the scope for significant falls in the near term. AUSSIE HIT The Australian dollar fell to a one-year low of $0.9414 , down around 15 percent from a 29-year high hit in July, as an increasing number of market players start to worry about Chinese growth, which many investors have counted on as the main growth driver globally as developed economies flop. Highlighting such concerns is a sharp fall in the price of copper, of which China is by far the biggest consumer, to a one-year low on Monday . The commodities-driven currency extended losses after the Reserve Bank of Australia opened the door to possible easing as early as next month if upcoming inflation data proves to be benign, saying an "improved inflation outlook would increase the scope for monetary policy to provide some support to demand". "The dovish RBA statement highlights risks out there that the RBA sees and coming on the back of a risk-off environment the Aussie is going to be hit doubly hard," said Foley. The Canadian dollar also slipped to a one-year low of C$1.0562 . As market players try to hoard the dollar, the world's most liquid currency, it rose to a nine-month high of 79.823 against a currency basket The greenback was little changed against the yen at 76.66 yen . The yen was bought sharply during the 2008-09 crisis as many market players unwound yen-carry trades, but some analysts said such trades have not accumulated so much recently, meaning the yen has limited reasons to gain. (Additional reporting by Hideyuki Sano; Editing by Catherine Evans)

Source