Euro surges to record high vs yen

TOKYO, Nov 27 (Reuters) The euro climbed to a record high against the yen and a 20-month peak versus the dollar in early Asian trading on Monday, extending gains made late last week partly on prospects of higher interest rates in the euro zone.

The euro surged above the psychologically key $1.30 level on Friday in thin trade, picking up steam after taking out a series of knock-out option triggers, said a trader for a Japanese trust bank.

''I think there were probably some speculative moves targeting the period around Thanksgiving,'' he said.

Helping to lift the euro was an upbeat German business sentiment survey released last week that strengthened expectations euro zone rates will keep rising into next year.

But comments by French Trade Minister Christine Lagarde, who was quoted in Monday's edition of Japanese business daily Nihon Keizai as saying the euro's recent rise had been considerable, could help temper the currency's advance.

The dollar, which suffered a broad-based sell-off on Friday, also came under fire from persistent concerns about central banks diversifying their foreign exchange reserves away from the currency, as well as from worries about the U.S. economic slowdown.

The euro hit a record high of 152.45 yen and a 20-month peak of $1.3180 on electronic trading platform EBS.

By 0020 GMT, the euro was at $1.3145, off the high but up from around $1.3095 in late U.S. trade on Friday.

It was at 151.90, yen up from 151.70 yen in late U.S. trade.

The dollar hit a three-month low of 115.40 yen in early trade, before trimming losses. It was last at 115.60 yen, down from around 115.85 yen in late New York.

Some traders said the dollar could decline further if more unwinding of yen carry trades takes place. In such trades, investors borrow low-yielding currencies like the yen to invest in higher yielding ones.

Traders are likely to take cues from remarks by Bank of Japan Governor Toshihiko Fukui, who is meeting business executives in Osaka, western Japan, on Monday and is due to give a speech there later this session.

Reuters DH VP0625