* Euro rises vs dollar on short-covering
* But Greek uncertainty caps gains, hits 10-yr low vs AUD
* German ZEW at 1000 GMT eyed
By Satomi Noguchi
TOKYO, Feb 16 (Reuters) - The euro rose against the dollar on
Tuesday as expectations that European finance ministers would not
say anything new on solving Greece's debt woes prompted
short-term players to trim their short positions.
But many investors remained cautious about buying the single
currency on uncertainty that debt problems in Greece will be
resolved quickly.
The market was also waiting for the German ZEW institute's
economic sentiment index at 1000 GMT, which is expected to fall
to 42.0 from 47.2 previously.[]
"The market had sold the euro up to their chins before the
meeting (of finance ministers), and some people are moving to
trim those positions," said a senior trader for a Japanese bank.
"But the euro lacks its own buying factors. So this euro gain
looks very fragile," he continued.
Eurogroup chief Jean-Claude Juncker said on Monday euro zone
finance ministers had agreed Greece should propose new measures
by March 16 to meet deficit targets and if Greece appears to be
off course, additional measures will be requested.
[]
The euro fell to a decade low against the Australian dollar
after the minutes from the Reserve Bank of Australia's latest
meeting did little to alter expectations that the Australian
central bank will gradually raise rates, marking a clear contrast
to the euro zone economy which has been tainted by the debt
problems in the region. []
Market players also found some comfort in buying up
growth-linked or risky higher-yielding currencies such as the
Australian and New Zealand dollars, while the Chinese market
remained closed for holidays, reducing risk from market
volatility.
Jonathan Cavenagh, currency strategist at Westpac, said that
on Monday the EU's meeting did not seem to give a great deal of
confidence to markets that the situation in Greece will move
forward.
"The market is heavy on the euro and it is a sell on a
multi-month basis," he said.
Traders said the market will be also watching further hurdles
for Greece, which has two lots of more than 8 billion euros of
government bonds to refinance in April and May.
The euro <EUR=> was trading around $1.3665, up 0.5 percent on
the day, above Friday's nine-month low of $1.3532. The currency
has shed nearly 10 percent since late 2009 as worries over
whether Greece can service its debt mounted.
Also weighing on the euro were concerns Spain and Portugal
could face similar debt problems and Europe's post-recession
recovery could falter.
The latest data from the Commodity Futures Trading Commission
shows currency speculators ran up a record short euro positions
in the week to Feb. 9.
Against the Aussie, the euro fell as low as A$1.5229
<EURAUD=>, its lowest since September 2000.
The euro was higher on the yen <EURJPY=R> at 122.70 yen from
122.29 yen late on Monday in London. U.S. markets were shut on
Monday for a holiday.
The dollar index <.DXY> <=USD> was down 0.3 percent at
80.041, below a seven-month high of 80.748 hit late last week.
Against the yen, the dollar dipped 0.2 percent to 89.80 yen
<JPY=> on broad selling of the greenback.
The RBA minutes showed the central bank decided to skip a
rise in interest rates this month to better assess the impact of
past hikes at home and the effect of sovereign debt stress
abroad, though further gradual tightening is likely to keep
inflation contained over time.
The Australian dollar <AUD=D4> climbed 0.9 percent to
$0.8962, from $0.8885 late in London on Monday.
(Additional reporting by Anirban Nag in Sydney, Kaori Kaneko in
Tokyo; Editing by Joseph Radford)
