U.S. Markets open in 6 hrs 36 mins

FOREX-Yen gains after Portuguese bank woes unsettle stocks

* Yen hits multi-month or multi-week highs

* Worries about some Portuguese banks knock equities lower

* Markets in two minds over possible impact of bank fallout (Updates prices, adds quotes)

By Ian Chua and Shinichi Saoshiro

SYDNEY/TOKYO, July 11 (Reuters) - The yen was poised to end the week higher on Friday, having jumped to a five-month peak against the euro overnight as banking woes in Portugal drove global equities lower and lifted demand for the safe-haven currency.

Fears over financial troubles at the family-owned holding companies behind Portugal's largest listed bank had unsettled European markets on Thursday.

That in turn weighed on Wall Street and there was a knock-on effect in some Asian bourses on Friday.

The euro last traded at 137.79 yen, having fallen as far as 137.50, its lowest since early February.

The dollar was at 101.35 yen after touching a seven-week low of 101.06. The Aussie fetched 95.09 yen , following a dip to a five-week low of 94.66.

"Considering we currently have record-low volatility in the bond and currency markets, and near record-low volatility in the equity markets, coupled with record highs in equities, the protection of profits will take priority," said Evan Lucas, a strategist at IG in Melbourne.

"The question that will come later is: Is this an isolated event or is it the first chink in the chain to fire contagion fears?"

The common European currency slid as far as $1.3589 from a session high of $1.3651.


Details of Portugal's banking woes were complicated and left markets in two minds about whether this was a bank-specific event or something more systemic.

The fact that Wall Street managed to close off the session low and U.S. Treasuries saw only modest bids suggested that investors initially overreacted to the news.

"The Portuguese banking trouble appears contained, as shown by the limited decline in U.S. stocks and with none of the emerging market currencies falling more than 1 percent against the dollar. It's difficult to simply label the situation 'risk off'," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

"Treasury yields and U.S. and Japanese monetary policies remain drivers of the yen. True, the Portuguese banking woes did strengthen the yen, but I see this more as a result of the dollar being sold as Treasury yields fell," he added.

The Treasury 10-year note yield briefly fell to a five-week low of 2.494 percent on Thursday before pulling back above the 2.500 percent threshold.

In an event overshadowed by the Portuguese bank developments, the Bank of England held interest rates at a record low on Thursday and offered no new guidance on its policy outlook.

Sterling eased slightly on the dollar to $1.7123, but stayed near a six-year high of $1.7180 set earlier in the month.

(Editing by Eric Meijer and Alan Raybould)