* Short-covering lifts euro, but gains seen limited * Italy, Spain debt auctions, ECB meeting loom * Swiss franc firmer after SNB chief resignation * Aussie, kiwi hit new highs against euro LONDON, Jan 10 (Reuters) - The euro held its ground against the dollar on Tuesday, off the previous day's 16-month low, as investors took profit on short positions, but any recovery was seen limited before debt auctions later this week. With the euro zone debt crisis showing no sign of abating, the euro could come under renewed pressure as auctions of Spanish and Italian debt on Thursday and Friday gauge investor appetite for the countries' bonds. ID:nL6E8C60WA] The euro was down 0.1 percent at $1.2773, off a low of $1.2666 hit on Monday, though it fell short of stop loss orders said to lie around $1.2800 and stayed well below $1.30, which was expected to prove stiff resistance. Data from the Commodity Futures Trading Commission showed record euro net short positions and analysts and traders expected the single currency would benefit from bouts of short-covering. The euro has support just below $1.2600, a 76.4 percent retracement of its rally from June 2010 to May 2011 and its trough on Aug. 24, 2010. "It's still a weak and vulnerable euro going forward, with no sign of a quick solution to the debt problems in the euro zone," said Niels Christensen, currency strategist at Nordea in Copenhagen. "Every move higher in euro/dollar will be a reason to put on new shorts. I can't see it moving up much, it will be difficult to get above $1.30 again." Concerns about the euro zone's most indebted country resurfaced as Germany and France warned Greece it would get no more bailout funds until it agreed with creditor banks on a bond swap. DEBT AUCTIONS, ECB The Italian and Spanish auctions will be the main focus of a busy debt supply schedule this week, which also includes sales from triple-A issuers Germany, the Netherlands and Austria. A European Central Bank meeting on Thursday will also be in focus and may weigh on the euro. The bank is expected to press governments to step up their efforts to tackle the euro zone debt crisis as it leaves rates on hold for now. The rebound in the euro led the dollar to retreat 0.1 percent against a basket of major currencies to 80.973, having hit 81.470 on Monday, its strongest in more than a year. Short-covering also helped lift the euro against the yen. It rose 0.1 percent to 98.11 yen, moving away from an 11-year trough of 97.28 yen marked overnight. "Although we see EUR/USD falling significantly in the first half, a speculative market very 'short' euro warns of regular short squeezes, in the current instance to perhaps the $1.2850/2900 area," ING analysts said in a note to clients. The higher-risk Australian dollar gained 0.6 percent to $1.0295, while rising to a new high against the euro . The euro also slipped to a record low against the New Zealand dollar. Data showed China's exports and imports grew at their slowest in more than two years in December as both foreign and domestic demand waned. But it raised expectations of the possibility of more monetary easing from China, lifting stock and the Australian dollar. Against the Swiss franc, the euro stood at 1.2114 francs , having fallen as low as 1.2097, its weakest in nearly four months. The franc gained after the resignation of the head of Switzerland's central bank prompted talk the market could test the bank's resolve to cap the currency at 1.20 euros. SNB watchers said interim central bank chief Thomas Jordan was likely to continue the current SNB policy.

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