* Euro off two-year lows vs dollar
* Irish "yes" vote could provide very brief reprieve
* But trend remains for further falls in the euro
LONDON, May 31 (Reuters) - Expectations of an Irish vote in favour of Europe's fiscal pact lifted the euro off a near two-year low against the dollar on Thursday, though any gains were seen limited as concerns grow that Spain may need to seek outside aid.
Opinion polls pointed to a "yes" vote in Ireland's referendum, which analysts said could prompt investors to cut some of their hefty bearish bets on the euro.
in Greece, a new poll showing a pro-bailout conservative party ahead of the anti-bailout far left in the run-up to a parliamentary vote also helped the euro.
The euro fell as low as $1.2358, a level last seen in mid-2010, before recovering to trade up 0.2 percent at $1.2400. Gains were expected to be short-lived, with sell offers cited above $1.2430 and some speculators selling into the bounce.
The common currency was poised for its biggest monthly fall since last September, with some analysts expecting it to drop towards $1.20 in coming weeks as the debt crisis deepens.
"We could see a very brief pause in the downtrend in the euro because of the Irish referendum, but beyond that the news is fairly negative," said Ian Stannard, head of European currency strategy at Morgan Stanley.
"There is very little on the horizon to provide sustained support and the trend is clearly downwards."
Morgan Stanley forecast the euro would fall to $1.15 early in 2013, though this assumes Greece stays in the euro, he said.
Spanish government bond yields held near euro-era highs and yields on safe-haven German bonds stayed close to record lows as worries about Spain's banking sector and chances that the country would have seek an international bailout mounted.
With German two-year yields near zero, traders said most safe-haven flows have, so far, stayed within the single currency area. But if that were to change and those flows began to exit the euro zone, the euro's decline against the dollar and the yen could accelerate considerably.
European Central Bank President Mario Draghi said the ECB could not "fill the vacuum" left by a lack of action on the part of governments on fiscal growth.
The euro was flat at 97.76 yen, having dropped to its lowest in more than four months at 97.352 yen. This brought it close to an 11-year low of 97.04 yen hit in January.
FLIGHT TO SAFETY
Market players remained nervous about political risks in the euro zone, especially Greek elections on June 17.
"The way you trade these political risk factors is to sell the euro," said Stuart Frost, head of Absolute Returns and Currency at fund manager RWC Partners.
"The Greek opinion polls are very volatile, and only the election results will matter. In any case, the situation in Spain is pretty grim, so we expect the euro to grind lower to $1.20 and then towards $1.18."
With investors stepping up their purchases of safe-haven assets, the dollar index hit a 20-month high of 83.11. It was last at 82.857 and looked set to close above its 100-month average, at 81.824, for the first time in almost 10 years.
A break of the 100-month average has been a good indicator of a long-term trend change, having produced four successful signals in the past 30 years.
The dollar fell to 78.71 yen, its lowest in 3-1/2 months, before recovering to trade at 78.81.
A fall in U.S. bond yields also helped to push down the dollar against the yen, as the currency pair is strongly correlated with the yield gap between the two countries.
Traders will watch the U.S. ADP employment report, along with the first-quarter gross domestic product reading and initial jobless claims. Weak data could feed speculation about further quantitative easing, leaving dollar/yen vulnerable.
The dollar has crucial support for now from its 200-day moving average at 78.63 yen.
FOREX-Euro slumps; safe-haven yen rallies broadly - Reuters UK
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Forex: USD/JPY extends decline after US data - NASDAQ
FXstreet.com (Córdoba) - The dollar weakened further against the yen and touched marginal new lows following the release of a string of disappointing US data.
Even though the second reading on US 1Q GDP came in line with expectations at +1.9%, separated data showed the US employment sector is not picking up as expected. Last week's jobless claims rose by 10,000 to 383,000, while private payrolls increased by 133,000 in May, below the expected 148,000 rise, according to the ADP report.
USD/JPY broke below previous daily lows and hit a fresh one at 78.60 in recent dealings, last seen mid-February. At time of writing, the pair holds barely above recent lows, recording a 0.5% loss on the day.
From a technical perspective, "The USD/JPY trades below the 79.15 area, 61.8% retracement of the latest daily bullish run from 76.01 to 84.17, which suggest further slides ahead", says Valeria Bednarik, chief analyst at FXstreet.com. "200 DMA is located right around 78.60, so it will offer some short term support, although the pair is biased lower. A break below should point for a downward continuation with next supports at 78.20 and 77.75, this last 78.6% retracement of the same rally".
Forex: EUR/USD falls and tests 1.2400 - FXStreet.com
Mitt Romney Raises Money in the Bay Area - NBC Bay Area
The Silicon Valley is not President Barack Obama's personal ATM.
Republican presidential hopeful Mitt Romney is in town for a second day Wednesday and he is showing that there is plenty of money for his party's coffers in the Bay Area as well.
Mr. Obama has made several trips to Northern California in the past year to raise money for his campaign.
Romney followed the president's lead this week by landing in the Bay Area Wednesday fresh off his victory in the in the Texas primary a day earlier.
Wednesday Romney held a fundraiser at the Chateau Carolands in Hillsborough, where guests paid between $2,500 to $50,000 to see the presidential hopeful, according to Carla Marinucci.
Former U.S. Secretary of State and Stanford professor Condoleezza Rice endorsed Romney at the event. She has been mentioned as a possible vice president pick for Romney but Rice has said she is not interested in the job.
Thursday Romney had several more events scheduled in the Bay Area, including a stop at the failed headquarters of Solyndra.
The Obama administration has come under fire for grants it gave to the solar energy provider a $535 million loan guarantee from the government but has since declared bankruptcy.
Romney has been hammering the president on Solyndra during his Bay Area visit.
MONEY MARKETS-US SA commercial paper market grows on week - Reuters UK
Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
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