The euro hit a lifetime low against the Swiss franc and a three-week trough versus the yen on Tuesday on funding jitters ahead of a deadline for European banks to repay money to the European Central Bank.

The yen also benefited as Japanese exporters repatriated earnings ahead of the second quarter end, selling euros and dollars, and as a steep fall in Shanghai stocks added to the Japanese currency's safe-haven allure.

Against the dollar, the euro fell 0.4 percent on the day to $1.2235 EUR= after losing 0.8 percent on Monday.

The euro has lost 4 percent against the Swiss franc since mid-June when the Swiss central bank backed off a pledge to fight excessive franc appreciation, shedding about 10 percent this year. A dealer at a Swiss bank said on Tuesday there was no sign of the central bank so far.

European banks must repay 442 billion euros ($545.5 billion) to the ECB on Thursday, leaving a potential liquidity shortfall in the financial system of over 100 billion euros.

Investors are nervous, shifting their attention back to Europe because a massive amount of money will move there, said Hideki Hayashi, global economist at Mizuho Securities.

The euro could revisit its eight-year low against the yen, although I think funding worries linked to repayments to the ECB are a bit overdone.

The euro fell as low as 1.3250 francs EURCHF=, the weakest since its 1999 launch, while the dollar edged down 0.2 percent to 1.0846 francs CHF=, above Monday's two-month low of 1.0817.

For the dollar/swiss, the decline continues to develop in an impulsive manner, with the focus on the 1.0795 trendline support from the November 2009 low, as the euro/swiss maintains the one-way decline with little evidence of a reversal, JP Morgan said in a report.

Selling was also seen on the Australian dollar, which slid 1.6 percent on the day to 76.61 yen AUDJPY=R as the slide in Shanghai stocks and falls in other Asian equity markets prompted flight from higher-yielding assets.

Shanghai stocks .SSEC were down 3.9 percent as investors pulled funds from the market to prepare for a major IPO by Agricultural bank of China.

The euro dropped 1 percent to its weakest in three weeks at 108.62 yen EURJPY=R, towards an 8 1/2-year trough of 108.06 yen struck on EBS on June 7.

The dollar hit an eight-week low at 88.60 yen JPY=.

Another trader at UK bank said not all yen strength was 'safe-haven' driven. A drop in U.S. Treasury yields, which makes U.S. debt less attractive to Japanese investors, had also been weighing a bit on dollar/yen.

The benchmark 10-year U.S. Treasury yield fell below the key 3 percent level to struck a 14-month low. [US/]

The euro hit a 19-month low against sterling to 81.14 pence EURGBP=D4.

Financial markets will also closely watch debt auctions by France and Spain later this week after tepid demand for Italy's sale of 7 billion euros of government bonds on Monday kept worries about euro zone debt troubles alive.

The premium investors demand to hold 10-year Italian, French and Spanish government bonds, rather than euro zone benchmark German Bunds, all widened.

The pound GBP=D4 was mostly steady against the dollar after hitting its highest in nearly two months at $1.5130 GBP=D4 on Monday, when Bank of England policymaker Andrew Sentance told Reuters drastic tax hikes and spending cuts in Britain would not delay the start of a tightening cycle.

The dollar index .DXY, which tracks the performance of the greenback versus a basket of six other major currencies, was 0.2 percent higher at 85.817, holding above last week's low around 85.09, which was seen as near-term support. (Additional reporting by Anirban Nag in Sydney and Reuters FX analyst Krishna Kumar and Charlotte Cooper in Tokyo; Editing by Edwina Gibbs)

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