The Swiss franc posted its biggest weekly decline against the euro in more than seven months on concern policy makers may act to weaken the currency and as an easing of Europe’s debt crisis curbed demand for safer assets.

The currency slid against 12 of its 16 most actively traded counterparts monitored by Bloomberg this past week, losing most against the Swedish krona. Swiss National Bank Vice President Thomas Jordan said this week that the franc’s strength posed an “extraordinary challenge” to some exporters. The franc erased losses against the euro today after China raised banks’ reserve ratios, stoking concerns the move will hurt the global recovery.

“People are mindful of the risks of official action in the franc,” said Jeremy Stretch, executive director of foreign- exchange strategy at Canadian Imperial Bank of Commerce in London. “Exporters are hurting. There’s also relief that Europe’s debt issues are easing up, at least temporarily.”

The Swiss currency slid as much as 0.6 percent to 1.2952 per euro before trading little changed at 1.2869 as of 5 p.m. in London, for a weekly decline of 3.1 percent, the steepest such drop since May last year. The franc depreciated 0.2 percent to 96.58 centimes per dollar.

The SNB spent more than a year intervening in currency markets to weaken the franc and head off deflation risks before abandoning the policy in June. The central bank expects a loss of 21 billion Swiss francs for 2010, according to an e-mailed statement today.

“The authorities are aware that unilateral intervention in the currency markets is expensive, if not futile,” said Stretch. “This is more a case of verbal rhetoric.”

The franc has gained about 7 percent versus the euro since the start of November as investors sought a haven from the financial turmoil elsewhere in Europe.

‘Less Wary’

Governments in the 17-member zone are planning to step up efforts to contain the debt crisis that last year forced bailouts for Greece and Ireland. The plan includes aid for Portugal, debt buybacks, lower interest rates on rescue loans and guarantees against excessive debt, people with knowledge of the talks said this week.

“Markets are less wary of the euro-zone side of the equation” which reduces demand for assets perceived as safer, including the franc, said Stretch.

Swiss policy makers were scheduled to hold talks with labor unions and businesses today to discuss the impact of the stronger currency on the economy, NZZ am Sonntag reported last weekend, without saying where it got the information. SNB spokesman Nicolas Haymoz declined to comment on the report when contacted by Bloomberg News yesterday.

‘Direct Intervention Unlikely’

“I don’t think that they’re going to commit to taking on the market,” Adrian Schmidt, a foreign exchange strategist at Lloyds TSB Bank Plc in London, said in a telephone interview. “They might possibly act to smooth really strong swings in the franc but they’d be unlikely to engage in direct intervention.”

Vice President Jordan, who spoke in Reichenau, Switzerland, on Jan. 12, refused to say whether policy makers are planning a renewed round of foreign-currency purchases to weaken the franc.