* Aussie, kiwi gain on rate hike prospects after jobs, RBNZ

* Greece, Spain worries still weigh on investors

* BoE holds rates, SNB keeps FX intervention threat (Recasts, updates prices, adds details, adds comments)

The dollar fell against the euro for the second straight day on Thursday after a narrower-than-expected U.S. trade deficit for October and some improvement in jobless claims, reducing safe-haven demand for the greenback.

Ongoing concerns over the fiscal health of Greece and Spain capped gains on the single currency however. Standard & Poor's cut Spain's credit outlook to negative on Wednesday, a day after Fitch downgraded Greece's credit rating, sparking concerns about sovereign debt.

The Australian and New Zealand dollars both rose on growing expectations of higher interest rates.

The continuing claims rolled off quite a bit, and they came in about almost 300,000 below what the market was looking for, said Jacob Oubina, currency strategist at Forex.com in Bedminster, New Jersey. And the trade balance in the U.S. also improved considerably. A positive for the risk trade.

The euro was last up 0.2 percent at $1.4758 EUR=. The dollar was up 0.3 percent at 88.13 yen JPY= though off the session peak of 88.45 yen.

ECB Governing Council member Ewald Nowotny said Thursday the current worries about Greece's finances would not split the euro zone [ID:nFAE005544]

The euro has probably taken a bit of a hit from these internal problems in the euro zone, said Johan Javeus, currency strategist at SEB in Stockholm.

The U.S. trade deficit shrank to $32.94 billion in October from a revised $35.65 billion in September, the government said. Economists expected a deficit of $36.8 billion for the month. For details, see [ID:nN09169993]

The latest trade numbers finally reflect the positive implications of a weaker dollar, said Kathy Lien, director of currency research at GFT Forex. U.S. trade with China was particularly strong, with exports reaching a record $6.9 billion, which tells us that the U.S. is also a beneficiary of the recovery in China.

The U.S. Labor Department reported continuing claims, or the number of workers collecting jobless benefits after an initial week of aid, fell to 5.157 million in the latest week from a revised 5.46 million in the prior week. [ID:nN10153952].

ADVANCE AUSTRALIA FAIR

Strong Australian jobs data fueled anticipation that rates will rise further in Australia, and the Reserve Bank of New Zealand signaled its rates may go up sooner than thought.

The Australian dollar AUD= added 0.9 percent against the dollar to $0.9170, while the New Zealand dollar NZD= gained 1.4 percent to $0.7286, hitting its highest level in a week, with both bolstered by expectations interest rates will rise.

Gains in the currencies prompted analysts to speculate the market may be switching from the recent trend of trading on risk sentiment, which has seen the euro tend to gain in tandem with higher-yielders like the Australian dollar.

Interest rates are becoming a more important factor, and the market is looking more at fundamentals now, said You-Na Park, Commerzbank analyst in Frankfurt.

Sterling was up 0.4 percent against the dollar GBP= at $1.6316, but barely budged after a widely expected decision by the Bank of England to hold interest rates at a record low 0.5 percent and keep its asset-buying program unchanged.

The euro was little changed against the pound at 90.59 pence EURGBP=.

The Swiss franc dipped briefly after the Swiss National Bank (SNB) held interest rates steady and stuck to its pledge to fight an appreciation of the franc decisively. [ID:nZUX000032]

This was tempered, however, as the bank dropped its offer to buy corporate bonds, the first signs it was easing drastic stimulus measures, and as SNB chairman Jean-Pierre Roth said the franc had stayed stable versus the euro. [ID:nGEE5B81FC]

The euro briefly rose to a session high around 1.5134 francs EURCHF=, according to Reuters data, before dipping to around 1.5112, little changed on the day. (Reporting by Nick Olivari; additional reporting by Wanfeng Zhou in New York and Jessica Mortimer in London; editing by Jeffrey Benkoe)

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