The Swiss franc jumped Wednesday after the Swiss National Bank announced fresh measures to drive down money market rates to stem the franc's strength, but refrained from direct intervention or pegging the currency as some had speculated.

Traders said investors had been wary of betting against the Swiss authorities intervening and possibly introducing a lower target level against the euro, but confirmation that no such measures were planned for now sent the franc higher as demand for the safe-haven currency soon resumed, Reuters reported.

The euro fell more than 2 percent against the Swiss franc to hit a low of 1.12248 francs on EBS trading platform, way below an earlier high of 1.15499 francs when it rose above 1.15 for the first time this month.

"This is a disappointmnet as the market was expecting far more radical measures from the SNB like targeting a specific exchange rate," said Lena Komileva, senior vice-president, foreign exchange at Brown Brothers Harriman.

"This is more of the same, and is inadequate in an environment where investors are seeking safe haven. This will invite more speculative flows into the Swiss franc."

The Swiss National Bank said Wednesday it would expand existing measures to counter the runaway franc by expanding bank sight deposits and that it would take further measures against the currency's strength if necessary.

"With equity markets weak, the Swiss franc will be vulnerable to further moves higher," said Niels Christensen, currency strategist at Nordea in Copenhagen.

WEAK EURO

European equities fell 0.8 percent, while the euro dropped 0.4 percent against the dollar to $1.4343 as French and German plans for closer fiscal integration failed to convince investors that leaders had gone far enough to tackle a spreading regional debt crisis.

The euro fell below support at its 100-day moving average around $1.4356 and only just held above its 55-day moving average at $1.4330, leaving it open to a test of last week's low just above $1.41.

France and Germany unveiled far-reaching plans on Tuesday for closer euro zone integration, including deficit limits and biannual summits and said that joint euro zone bonds may be a longer-term option.

Many experts believe the only way to ensure affordable financing for the bloc's most financially distressed countries would be for the euro area to issue joint bonds.

Investors also bought the safe-haven yen, with the dollar down 0.25 percent at 76.60 yen , near a record low of 76.25 yen.

(Additional reporting by Anirban Nag in London and Antoni Slodkowski in Tokyo; editing by Stephen Nisbet)

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