* Swiss franc climbs, government accepts strength
* Dollar slides against yen, BofJ intervention eyed
* Markets eye upcoming U.S. payrolls data (Updates prices, adds details)
NEW YORK, Aug 31 (Reuters) - The Swiss franc jumped against the euro and the dollar on Wednesday after a top Swiss government official said the nation would have to live with a strong currency and the Swiss National Bank (SNB) stayed away from intervention.
The SNB has been conspicuously absent from the currency forwards market since last week. It did not take any new measures after making an announcement on three of the last four Wednesdays in August.
Switzerland's economy minister detailed plans to offset the currency's impact on the economy but not to directly counter its strength. For details, see [ID:nL5E7JV2LZ]
"We'll have to keep living with the strong franc for some time. It must be a combination of measures that will lead us into the future," said Economy Minister Johann Schneider-Ammann.
The scaling back of currency intervention speculation pushed the euro down 2.6 percent to 1.15341 francs on electronic trading platform EBS EURCHF=EBS, while the dollar slumped 2.2 percent to 0.8026 francs on EBS. CHF=EBS
"The franc is massively overvalued," Schneider-Ammann said.
It was the biggest daily loss in the dollar against the Swiss franc since Aug. 9, when the dollar fell to a record low of 0.70676 Swiss francs. The euro also saw its biggest one-day decline since Aug. 9, when it fell to a record low of 1.0075 Swiss francs.
The SNB's intervention in the swaps market and moves to flood the Swiss banking system with francs and cut interest rates to near zero had brought the Swiss franc back from peaks.
The low-yielding Swiss franc may recoup more losses from earlier this month as the government lets markets decide its fate, with policymakers expecting the currency to remain strong, according to David Song, analyst at DailyFX in New York.
"The rebound in the franc may gather pace in the days ahead, and the Swissie may continue to outperform its major counterparts as market participants diversify away from the U.S. dollar," Song said.
Analysts said the the Swiss franc looked oversold on daily charts, having hit its lowest level since early July on Monday.
Mounting concerns about European sovereign debt and hopes of new U.S. Federal Reserve stimulus drove investors back into the safety of the Swiss franc, according to Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
"While the threat of SNB intervention may slow the franc's rise, it is unlikely to meaningfully deter investors from the safe harbor offered by the franc."
For the month, the dollar has climbed 1.3 percent against the Swiss franc, the first monthly gain since January 2011. The euro has climbed 1.934 percent against the Swiss franc, the first monthly gain since March.
Traders also awaited Friday's key U.S. Labor Department report on August unemployment and payrolls amid renewed expectations the Fed would act again to boost the economy.
The dollar was down 0.3 percent at 76.534 yen. JPY=EBS
With the yen hovering near a record high of 75.941 against the dollar earlier in August on trading platform EBS, traders remained wary of the potential for Japanese authorities to intervene to sell the yen.
The dollar slumped for the third straight month against the yen.
Against the dollar, the euro was last down 0.5 percent at $1.4375 on EBS EUR=EBS. Traders said month-end demand for dollars from investors rebalancing stock and bonds portfolio weighed on the euro.
The euro gained 0.3 percent against the dollar in August, the first monthly gain since June.
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