(Reuters) - The dollar stabilized on Wednesday after a spike in U.S. Treasury yields helped it recover from a sharp loss against the euro in a yo-yo session the previous day marked by thin year-end flows. The Swiss franc held near a record high against the euro and the dollar as investors sought refuge from euro zone debt, while the dollar threatened to break below a familiar range against the yen, another currency that tends to gain from risk-aversion. "The market is not driven by factors, but the thin conditions mean there could be more volatile moves," said a trader at a Japanese bank. The dollar index, which tracks the greenback's performance against a basket of major currencies, was slightly easier on the day at 80.29, though it still held above Tuesday's low of 79.596. "A lot of positioning has been flushed out after last night, so I don't expect much action today. There's nothing around in the order books at the moment," said a trader at a U.S. investment bank in Sydney. The turnaround came as U.S. Treasury yields rose across the board, with the benchmark 10-year issue gaining a hefty 16 basis points to reach just shy of 3.50 percent as dealers sought a bigger concession to take Wednesday's sales of seven-year government debt. The higher yields helped make the dollar more attractive for investors chasing better returns, though some analysts cautioned that the rise in bond yields, triggered after a weak five-year bond auction, may not bode well for the dollar. "If U.S. yields are rising because of worries over U.S. fiscal conditions, or rising inflation expectations, that's probably negative for the dollar," said Tohru Sasaki, chief FX strategist at JPMorgan Chase Bank. The euro stood at $1.3130 after a whipsaw move on Tuesday that took it to $1.3275, its best level since December 17. Although it slipped from that high, it held above its 200-day moving average, now at $1.3086, which has served as a strong support for more than a week. SWISS FRANC SHINES The euro remained near a record low against Swiss franc, a safe-haven currency that has attracted funds escaping euro zone debts on worries that some euro zone countries could face severe financing problems. The euro fetched 1.2495 francs, barely above a record low of 1.2440 francs set a week ago. The franc also held not far from a record high against the dollar. The U.S. currency traded at $0.9520 after hitting an all-time low around $0.9437 on Tuesday. The yen, which tends to be favored when investors grow risk-averse, was also supported after having hit a 6-week high against the dollar and a near two-year high against the British pound on Tuesday.

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