* Euro lifted by good demand at Spain auction * Short-covering may lift euro, but debt worries remain * ECB's Draghi says downside risks have increased * Strong U.S. ISM number adds to U.S. recovery hopes By Gertrude Chavez-Dreyfuss NEW YORK, Dec 1 (Reuters) - The euro rose for a fourth straight session against the dollar on Thursday, bolstered by solid demand at the Spanish and French debt auctions, although traders were inclined to view its gains as good selling opportunities. Spain sold 3.75 billion euros of three bonds at the top of the targeted range, although its cost of borrowing was the highest in 14 years and at levels seen as unsustainable for public finances. France also found demand for its sale of 4.35 billion euros of debt in several maturities. "While the rising interest rates that euro zone governments are forced to pay is widely acknowledged as unsustainable, the fact that market demand was strong has for now, alleviated some concerns about government funding issues," said Omer Esiner, chief market analyst, at Commonwealth Foreign Exchange in Washington. The euro was last up 0.4 percent at $1.34995. On Wednesday, the euro had hit a one-week high of $1.35337 on trading platform EBS after central banks of the United States, euro zone, Canada, Britain, Japan and Switzerland cut the cost of dollar loans to the banking system. The euro also rose to a two-week high against the yen currency had much scope for further rallies. Although investors cheered Wednesday's joint central bank action they are worried that the debt crisis remains unresolved, with little time for politicians to find a solution. A break above $1.3533 though could see the euro rise toward its Nov. 18 high of $1.3615, analysts said. If it fails to retest Wednesday's high, however, the rally may peter out. An increase in a key U.S. manufacturing index for November has pushed the euro higher against the dollar as it increased the market's appetite for risk and reinforced the view that the world's largest economy is on a stable path to recovery. With the ISM manufacturing index at 52.7 against a consensus forecast of 51.5, the euro rose above $1.3500 as investors added to risky trades. That reinforced a market view that the ECB could cut interest rates and extend its liquidity measures when it meets to decide on monetary policy next week and could well negate the euro's rally. More important for markets will be whether European leaders are able to agree on a comprehensive solution to tackle the debt crisis at a European Union summit on Dec. 9.

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