* French election campaign in focus, pressuring euro
* Dollar pulls above more than 2-month lows vs yen hit
* Investors await Trump-Abe meeting later this week
TOKYO, Feb 8 The euro nursed losses in Asian
trading on Wednesday, pressured by political woes in Europe
ahead of elections that checked its recent ascent against the
France's presidential race sank deeper into the mire of
scandal after centrist Emmanuel Macron was forced to deny an
extramarital affair and conservative Francois Fillon pressed on
with efforts to salvage his reputation after accusations that he
used taxpayers' money to pay his wife for work she may not have
Uncertainty about the two rounds of the election on April 23
and May 7 drove the premium that investors demand for holding
French over German government debt to its highest for almost
Opinion polls show Macron slightly ahead of Fillon in the
first round, but behind far-right National Front leader Marine
Le Pen. She has vowed to pull France out of the euro zone and
hold a vote on its membership in the European Union.
The euro was slightly lower on the day against the dollar at
$1.0681, after falling as low as $1.0656 on Tuesday, its
lowest since late January and well below last week's nearly
two-month high of $1.0829.
Against the yen, the euro slipped 0.2 percent to 119.86
, after dipping to 119.545 overnight, its lowest since
Three-month euro risk reversal spreads on euro/dollar
options widened to their largest levels in favour
of euro puts - the right to sell the euro - since June 2016.
Adding to the mood of uncertainty, elections will also be
held in the Netherlands, Germany and possibly Italy, and Greece
faces a bailout review as talks between it, its European lenders
and the International Monetary Fund on the country's bailout
obligations have dragged on for months.
However, the dollar's gains are seen limited by the
protectionist stance of U.S. President Donald Trump. Last week,
Trump and a top adviser strongly criticized Japan, China and
Germany, claiming they had all devalued their currencies to
benefit their own countries.
"The uncertainty of the French presidential election is
negative for the euro," said Masafumi Yamamoto, chief FX
strategist at Mizuho Securities in Tokyo.
"But on the other hand, Trump's dollar policy is supporting
euro-dollar. So with these two factors, I don't see a strong
sense of direction at the moment."
The market shrugged off data showing Japan's current account
surplus stood at 1.11 trillion yen ($9.88 billion) in December,
below economists' median forecast for a surplus of 1.29 trillion
yen in a Reuters poll.
The dollar was underpinned by news that China's foreign
exchange reserves unexpectedly fell below the $3 trillion level
last month for the first time in nearly six years, even as
Beijing has tried to curb outflows by tightening capital
The yuan lost more than 6 percent against the dollar last
year, the most among major Asian currencies, even as Chinese
banks fought to defend it, depleting China's foreign currency
reserves. It is likely to come under more pressure as the U.S.
Federal Reserve resumes hiking interest rates later this year.
The dollar erased early modest gains against the yen and
slipped 0.2 percent to 112.23 yen. But it remained above
its overnight low of 111.59 yen, its deepest nadir since late
November, as investors awaited a meeting of U.S.-Japan leaders.
Trump will welcome Japanese Prime Minister Shinzo Abe on a
U.S. visit later this week. Market participants await any
remarks on currencies or on Japan's fiscal or monetary policies
that might emerge from their meeting, although trade and defense
issues are likely to be in the spotlight.
"They will probably try to explain about the trade
relationship, so I don't think any surprises will come out, but
it's still difficult to expect what Trump might say," said
Harumi Taguchi, principal economist at IHS Markit in Tokyo.
"If Trump wants the U.S. to sell more cars in Japan, then
currencies might come up in the discussion," she said.
(Reporting by Tokyo markets team; Editing by Simon