* Euro falls as Deutsche Bank sours sentiment
* Deutsche Bank shares hit record lows, down 5 pct
* Yen on track to post 3 straight quarters of gains
By Anirban Nag
LONDON, Sept 30 (Reuters) - The euro lost ground broadly on Friday as concerns about the health of Deutsche Bank weighed on the single currency and undermined risk appetite across global markets.
Earlier, the euro hit a two-month low against the Swiss franc, but recovered sharply on speculation that the Swiss National Bank was perhaps intervening to cap the currency's strength. Nevertheless, the single currency was down 0.4 percent against the dollar, the yen and even the British pound.
Global share prices slipped on worries about Deutsche Bank , whose stock has hit record lows, briefly dropping below the 10 euros level for the first time, on concerns over a $14 billion demand from U.S. authorities for misselling mortgage-backed securities.
The latest lurch in Deutsche Bank shares came after Bloomberg reported that a number of hedge funds that clear derivatives trades with Deutsche had withdrawn some excess cash held at the lender, which has dropped to fourth in overall rankings as a currency trader.
"Investors are nervous about the fact that we may be about to witness another leg of the financial crisis. The euro has performed poorly on the back of these jitters," said Jane Foley, senior currency strategist at Rabobank.
The yen, also seen as a safe-haven currency, was underpinned by the latest bout of risk aversion. It looked set for its third straight quarter of gains against the dollar, on track for a rise of 2 percent so far this quarter.
Those gains come as investors suspect the Bank of Japan has reached a practical limit in stimulus and has lost clout in cheapening the yen.
Earlier, the dollar rose from around 101.15 yen to 101.80 yen in just a few minutes, a move traders said appeared to be linked to month-end or quarter-end flows. The dollar later pared some of its gains and was last trading at 101.10 yen, up slightly on the day.
Focus will be on U.S. data and a better-than-expected personal consumption expenditure (PCE) deflator - the Federal Reserve's favourite inflation gauge - could offer support to the dollar.
"The Fed seems more focused on employment than on inflation," said Marshall Gittler, head of investment research at FXPrimus.
"Nonetheless it could help to persuade the holdouts on the Fed that a rate hike in December - currently seen as only a 58 percent probability - is justified and therefore be dollar-positive." (Additional reporting by Masayuki Kitano; Editing by Janet Lawrence)