LONDON, Nov 25, 2010 (AFP) - The euro faced fresh pressure on Thursday over the eurozone debt crisis as Spain and Portugal came into focus after Ireland launched a new austerity drive as part of a massive debt bailout, dealers said. Trading was muted, however, given that US markets are closed for the Thanksgiving holiday, leaving Europe short of a lead for the afternoon, they added. In morning trade, the European single currency dropped to 1.3305 dollars from 1.3328 dollars in New York late on Wednesday, when it had tumbled to a two-month low of 1.3285 dollars. Against the Japanese currency, the dollar rose to 83.65 yen from 83.54 yen on Wednesday. "Another day, more weakness in the euro," said Kathleen Brooks, an analyst at trading group Forex.com. "But we are not seeing a repeat of the extreme moves we witnessed earlier this week -- instead the single currency seems to be on a slow grind lower." The shared eurozone unit has faced a rollercoaster ride this week on the back of the latest twists and turns in the eurozone debt drama. The euro jumped above 1.37 dollars on Monday after Ireland formally applied for a bailout from the European Union and the International Monetary Fund. It has since slumped on the back of mounting eurozone worries, despite debt-ridden Ireland's brutal austerity plan that was unveiled on Wednesday. The Irish government's plan, which will deliver 15 billion euros of savings over the next four years, is aimed at securing an enormous EU/IMF bailout of up to 85 billion euros. "The market remains nervous about the problems still engulfing Europe and peripheral bond yields continue to trend higher," Brooks added. "Most worrying, is the sharp surge in Spanish bond yields. They have risen more than 100 basis points since the start of the month and are currently trading above five percent. "Fears seem to be settling on a potential Spanish bailout exceeding the size of the current stabilization fund, throwing a possible rescue of the Iberian nation into chaos." Spain's debt risk premium has hit record highs this week as the Irish crisis deepened concern about the eurozone's weakest economies. Investors are punishing Spain's debt and shares as Ireland reawakens fears about the Spanish property-dependent economy and banking sector. Madrid has sought to assuage markets' fears, arguing that there was no risk Spain would need a financial rescue package. "Spanish authorities continue to deny that they need a bailout and its financial position is in better shape than the other peripheral nations," Brooks said. "However, another couple of weeks of rising bond yields could force the Spaniards ... to go to the fund -- if continuing to finance themselves in the capital markets becomes untenable. "This is the situation that the markets are daring to contemplate right now and the more likely a Spanish bailout becomes, the more investors are going to sell the single currency," she added. Market doubts remain over the international bailout of the former Celtic Tiger nation. "A glance at the euro/dollar exchange rate is enough to realise that the foreign exchange markets do not consider the bailout of Ireland to be a success," said Commerzbank analyst Ulrich Leuchtmann. "The expectation of many politicians that if Ireland applied for a rescue package now, the focus would move away from the debt crisis was obviously wrong. "Rising spreads in Portugal, Spain and Greece prove (it) -- the markets have their doubts regarding the European rescue package." In London, the euro changed hands at 1.3305 dollars against 1.3328 dollars late in New York on Wednesday, at 111.30 yen (111.33), 0.8434 pounds (0.8449) and 1.3316 Swiss francs (1.3276). The dollar stood at 83.65 yen (83.54) and 1.0008 Swiss francs (0.9962). The pound was at 1.5776 dollars (1.5771). On the London Bullion Market, the price of gold eased to 1,371.50 dollars an ounce from 1,372.50 dollars an ounce late on Wednesday.

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