* Euro falls to 2-mth low vs USD and yen, 19-mth low vs GBP * Stops cited below $1.2970, tech support around $1.2955 * Spanish bonds in focus, 10-yr yields soar above 6 pct By Anirban Nag LONDON, April 16 (Reuters) - The euro fell broadly on Monday, dropping to a two-month low against the dollar and the safe-haven yen and reaching a 1-1/2 year trough against the British pound, as Spain rekindled worries about the fragile state of the euro zone economy. As Spanish 10-year government bond yields rose above 6 percent for the first time this year, sentiment was cautious across financial markets, weighing on growth-linked currencies such as the Australian dollar while keeping the yen near a seven-week high against the U.S. dollar. News over the weekend that China had doubled the yuan's daily trading band against the dollar to one percent has so far had limited impact on major currencies. Spain's failure to convince investors that it can contain its budget deficit, along with recent losses in the Spanish stock market and the region's banking shares as the effects of the European Central Bank's one-trillion euro cash injection wane, drove investors to shun the common currency. The euro fell below reported option barriers at $1.30 to $1.29945, its lowest in two months, as selling by some Asian investors picked up early in the European session. It was last trading at $1.3010 with more stops said to be below $1.2970. Near-term support also lies around $1.2955, the 61.8 percent retracement of the euro's climb from a low of $1.2624 on Jan. 13 to this year's high of $1.3487 struck on Feb.24. "Pressure is building up on the euro with concerns over Spain dominant," said Jane Foley, senior currency strategist at Rabobank. "The focus will be on Spanish bond issuances this week and while the euro is holding around $1.30, the question is how long more can it be supported around these levels." Spain will auction bonds maturing in 2014 and 2022 on Thursday. The sale will be a test of investor appetite after Spanish 10-year yields rose above 6 percent, moving towards levels that would be regarded as unsustainable if maintained for an extended period. Five-year Spanish yields also broke above 5 percent to their highest this year at 5.07 percent. The jump in yields came after news that Spanish banks borrowed a record 316.3 billion euros ($412 billion) from the ECB in March, almost double the previous month's total, as they remained virtually shut out from wholesale credit markets. European Central Bank Governing Council member Klass Knot said on Friday he did not expect the ECB to provide more cheap three-year cash and hoped the bank never has to buy bonds again. However, Knot said the ECB could still support the bond market should the need arise. WEAKER ON THE CROSSES The euro fell not just against the dollar, but across a wide range of currencies, highlighting its struggles as the euro zone sovereign debt crisis returned to the forefront of investors' concerns. Against the yen, the euro fell to an eight-week low of 104.66 yen, while against sterling it fell to 82.10 pound, its lowest level since September 2010. The euro's fall could put pressure on the euro/Swiss franc, which has been trading just above the 1.20 franc floor set by the Swiss central bank in September. It last stood at 1.2023 franc, marginally lower on the day. "I wonder if the euro/Swiss can hold up when the euro is falling across the board. It will be interesting to see whether the market will try to test the floor," said a Japanese bank trader in Tokyo. With appetite for riskier assets and currencies taking a breather, market players bought back the yen, driving down the dollar to a seven-week low of 80.442 yen. The dollar was last down 0.4 percent against the yen at 80.55 yen. While many market players had expected the dollar to stay above 80 yen due to expectation of another monetary easing by the Bank of Japan later this month, some see more chance of short-covering in the yen as data showed last week speculators' net yen short positions remained near a five-year high. Commodity currencies were under pressure, getting little support from the Chinese move to widen the yuan's trading band. The Australian dollar fell 0.3 percent to $1.0340, while the New Zealand dollar was down 0.1 percent at $0.8200. Some analysts said Beijing's weekend decision to allow more yuan flexibility could eventually be positive for risk sentiment, believing that Chinese authorities would not push ahead with such financial reforms if they were not confident of avoiding a hard economic landing. In the end, it could have a limited impact as the move is unlikely to alter market views for a gradual yuan appreciation of around 2 to 3 percent this year. In fact the yuan weakened on the first day of trading after the wider band was adopted. (Additional reporting by Hideyuki Sano in Tokyo; Editing by Catherine Evans)

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