By Ambrose Evans-Pritchard

LONDON, England - August 25, 2010 - The Swiss franc has surged to an all-time high against the euro on capital flight from the eurozone after Irish, Greek, and Portuguese bonds came under renewed fire.

Yields on 10-year Swiss bonds fell to 1.02% as investors flocked into the ultimate safe-haven asset, now outperforming gold.

No country in the developed world apart from Japan has ever seen 10-year yields drop below 1%. Rates remained significantly higher during the two great depressions of the 1870s and 1930s.

Within the eurozone investors turned to German Bunds, pushing yields to an historical low of 2.11%. The search for safety seems driven by a swirling mix of fears over a double-dip recession in the U.S., austerity overkill across the west, and sovereign debt worries on the eurozone periphery.

The Swiss National Bank appears to have abandoned efforts to halt the appreciation of the “Swissie” after losing 14 billion francs over the first half of the year in a failed effort to stop money flooding into the country, some of it coming from German citizens in Bavaria opening precautionary accounts.

The franc punched through €1.30 on news that Standard & Poor’s had downgraded Ireland to AA-. The rating agency cited concerns that the bank rescue costs may ultimately balloon to €50 billion, against government estimates of nearer €25 billion. S&P said the public debt would rise to 113% of GDP if the bailout fund is included on budget books.