(Reuters) - The euro fell against the U.S. dollar on Thursday in volatile trading as concerns mounted that the euro zone debt crisis will only intensify next year, driving investors to sell into any rebounds in the single currency.

Analysts said the European Central Bank's first ever tender of ultra-cheap three-year loans on Wednesday was not giving much support to the euro. Doubts remained over how much of the funds will be lent to boost the ailing euro zone economy or used to buy peripheral sovereign bonds as banks deleverage and cut back exposure to government debt.

Market players said the looming threat of euro zone sovereign credit rating downgrades was also keeping investors on edge through the year-end season and into 2012.

European debt concerns continue to remain on the back burner with no significant new developments, said Michael Woolfolk, senior currency strategist at BNY Mellon in New York. It's no surprise the market continues to wait for political leaders to make political decisions on the future of the euro zone.

The euro was last down 0.1 percent at $1.3037, well off the session peak of $1.3119, according to Reuters data, but recovering from the session low $1.3017.

It remains within a cent of a 1-month low struck last week.

A total of 523 banks borrowed nearly 490 billion euros in loans from the ECB, but analysts were skeptical about whether the liquidity could alleviate funding tensions for some euro zone sovereigns.

In the longer-term the liquidity provided yesterday is not going to solve the debt crisis, it is not going to help southern European countries with their problems in getting control of their public debt, said Niels Christensen, FX strategist at Nordea in London.

2012 DEBT AUCTIONS EYED

There was also little evidence so far that the banks would be keen to use the funds to buy Italian and Spanish debt and help pull the borrowing costs of those countries lower.

Banks would be able to borrow three-year debt from the ECB at 1 percent and invest in Spanish or Italian bonds at around 5 or 7 percent, but may prefer to use the funds to shore up their own balance sheets.

Euro zone bond markets are expected to come under fresh pressure with some 230 billion euros of bank bonds, up to 300 billion in government bonds, and more than 200 billion euros in collateralized debt all maturing in the first quarter of 2012.

Some analysts expect portfolio managers will be conservative in allocating the funds, which could result in a limited outflow of euros overseas and curb selling in the single currency.

Even if banks do use the funds to buy assets it seems most likely that these will be domestic assets, not foreign assets, said Standard Bank in a note.

Standard Bank added banks would be wary of taking on FX or even debt market risk. We could find that the cash is deposited back with the ECB or, perhaps, leaked out only into the front end of core euro zone bond markets, the bank said.

The dollar did benefit from a report showing new U.S. claims for unemployment benefits dropped last week to its lowest in more than 3-1/2 years, suggesting the labor market recovery was gaining speed.

They continue to show an encouraging trend of declining claims. I think that reinforces the notion that the economy has strengthened in the fourth quarter. said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

The U.S. dollar was last up 0.1 percent at 78.16. It has been tied to a roughly 2-yen-wide band since Tokyo stepped into the market to stem its currency's strength on October 31.