* Euro down 0.3 pct vs dollar, retreats from day's high * Demand low for risky FX despite higher stocks * Econ risks to cap euro gains, but QE risk may hit dollar By Naomi Tajitsu LONDON, Aug 30 (Reuters) - The euro retreated from a session high against the dollar and the Swiss franc on Tuesday, with currency markets unconvinced that a rally in share prices would continue given ongoing economic problems in the euro zone. Investors seeking "safe-havens" for their cash boosted the U.S. currency against major currencies, although many in the market see a growing risk of another bout of Federal Reserve quantitative easing that would weaken the dollar. The euro hit a session low of $1.4472, pulling back from a two-month high of $1.4550 hit on Monday and brushing off a 1.3 percent rise in European shares . It slipped 0.3 percent on the day to 1.1800 Swiss francs . Market participants cited euro selling against the dollar by eastern European names, while London traders returning from a market holiday on Monday sold the single currency following its gains the previous day. Analysts said some investors were sceptical of a recovery in world stock markets following a heavy sell-off earlier this month, adding that this would cap demand for currencies including the euro. A merger of two Greek banks on Monday did little to soothe concerns about the country's debt problems, while comments from IMF President Christine Lagarde that European banks were undercapitalised kept confidence low in the region's financial sector, which has been rocked by the debt crisis. The Federal Reserve offered a grim view of the U.S. economy late last week but did not make clear it would step in, saying only it would hold a longer policy meeting this month to consider its options. With latest economic data on Monday slightly improved, the risk is that the situation will not be bad enough to push the Fed to act, but the economy will still broadly continue to struggle. "I don't think many people will wholeheartedly buy into the recovery in equities," said Niels Christensen, currency strategist at Nordea in Copenhagen. "People going long on euro/dollar are very quick to liquidate, and to take profit on those positions, so it will be tough for the euro to rise beyond $1.4570," he said, referring to a high hit in early July. On the other hand, the risk that the Fed will deliver more stimulus soon, would keep a lid on significant demand for the U.S. currency. QE would flood the financial system with more dollars and likely boost stocks, higher yielding currencies and the euro. The day's best performer was the New Zealand dollar , which rallied to a one-month high on the back of data showing a 13 percent rise in New Zealand home building approvals in July, adding to signs the economy is recovering. But other commodity-related currencies suffered, including the Australian dollar , which retreated from the day's high to trade a bit lower on the day. The U.S. dollar was up slightly against a currency basket at 73.774, but it slipped 0.2 percent to 76.66 yen pulling further away from an all-time low around 75.94 set earlier in the month, as market players stayed wary of yen-selling intervention by Japanese authorities. Finance Minister Yoshihiko Noda, who oversaw Japan's massive intervention earlier this month, was voted in as prime minister on Tuesday, suggesting no change in Japan's currency policy. The Swiss franc clawed back after plumbing a seven-week low against the euro on Monday after it was hit by news late last week that UBS was considering charging a fee to deter clients from hoarding the safe-haven currency. The dollar slipped 0.3 percent to 0.8130 Swiss francs after reaching a five-week high of 0.8239 on Monday, but the franc's gains were capped by expectations the Swiss central bank may take more measures to weaken the currency. (Additional reporting by Asia Forex Team; editing by Patrick Graham)

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