The franc fell 1.2 percent against the euro to trade at 1.1818 by 0704 GMT compared to the New York close while the franc fell 0.8 percent against the dollar.

The KOF economic barometer released on Friday showed a big fall for August, suggesting Swiss economic growth could flatten out faster than expected as the record strong franc and a weak global economy weigh on exports.

"The data substantiated expectations that weaknesses in manufacturing and consumer sentiment is spreading across Europe," said Credit Suisse analyst Marcus Hettinger, adding that Swiss PMI data would be eyed on Thursday.

"We remain neutral EUR/CHF and target a range of 1.14-1.19 over one month," he said, adding that the central bank might consider new measures to weaken the franc as it could soon reach its target to expand banks' sight deposits to 200 billion francs.

The franc has fallen steeply in the last two weeks after the Swiss National Bank slashed interest rates to zero and flooded the market with francs by expanding banks' sight deposits.

The SNB has threatened more action to counter what it says is a "massively overvalued" franc, prompting speculation it might be prepared to resume currency interventions or impose negative interest rates on deposits as it did in the 1970s.

That speculation was stoked further on Friday after UBS said it may charge client banks a fee on cash accounts they use to clear transactions.

SEB Bank technical analysts said the franc could next target 1.19 against the euro.

But Credit Agricole analyst Mitul Kotecha cautioned that safe-haven demand could return as euro zone troubles resurface.

"Markets may start the week in risk on mood but this is unlikely to last given renewed economic worries. Moreover, the euro zone peripheral country travails continue to exasperate markets," he wrote.

"Against this background the euro continues to defy gravity but may yet come down to earth with a bang."

Copyright Reuters, 2011