* Euro gains though Greece remains a key focus
* Dollar up vs most majors other than euro (Updates prices, adds quote, details; changes byline)
By Steven C. Johnson
NEW YORK, June 27 (Reuters) - The euro rose on Monday as investors bet Greece's parliament would approve a fiscal austerity package needed for the country to receive emergency aid and avoid defaulting on its debt.
A French plan aimed at sorting out how banks will roll over Greek loans to help the troubled euro zone country stay solvent also boosted the currency, which climbed as high as $1.4293 after hitting an overnight low around $1.41. [ID:nLDE75P0BM]
"The euro is still seems to be topping out around $1.43 and we're still negative on it in the longer run, but market expectations are the austerity plan will be voted in," said Mogens Hauschildt, senior dealer at Western Union Business Solutions in White Rock, British Columbia.
An initial vote on Greece's 28 billion euro package of unpopular spending cuts and tax increases is due on Wednesday. Lawmakers then vote on Thursday on a separate bill containing specific steps to implement it. [ID:nLDE75P0BM].
Greece must agree to the plan to obtain its next slice of international aid needed to make debt payments.
Hauschildt said the euro could spike to $1.45 if the package wins approval but would likely retreat from there, as it remains vulnerable to fiscal woes in Spain and Portugal.
Paresh Upadhyaya, senior currency strategist at BofA-Merrill Lynch, added: "It could be a buy-the-rumor-sell-the-fact situation. It looks a safe bet they will pass the measures but a weaker euro after that would not surprise me."
The euro was last up 0.6 percent at $1.4272
CHOPPY TRADE
Earlier, the euro fell firmly into the red after Moody's said Greek banks have lost about 8 percent of private-sector customer deposits so far this year. The ratings agency warned that they would face severe cash shortages if outflows mount to 35 percent of their deposits. For more see [ID:nN1E75Q0CR].
Rising U.S. stock indexes helped the euro recover, though, and traders said Middle East names bought it on dips.
Analysts said the euro remains vulnerable to selling on any comments from European officials that may cast doubt on the Greek ballot's outcome.
"Clearly, the volatility out there suggests people are very nervous," said Steven Butler, head of trading at Scotia Capital in Toronto. "I think trade will continue to be very choppy, and if the euro gets into the low $1.43s, that would be an area to sell."
The possibility of a Greek default has raised concerns about the health of the European financial system and whether it can withstand such a credit event. Such worries triggered a sell-off in Italian banking shares late last week.
Overall, the dollar has benefited from broad risk aversion stemming from the ongoing euro zone debt crisis, as investors have cut back on short positions in the U.S. currency.[IMM/FX]
"The fortunes of the USD will be determined largely by the 'not being the EUR,' capitalizing on any bad news and retreating when the market gets more hopeful," Credit Agricole analysts said in a note. (Additional reporting by Nick Olivari in New York and Naomi Tajitsu in London) (Reporting by Steven C. Johnson; Editing by Dan Grebler)