* Euro takes a pause from recent sharp sell-off * SNB keeps euro/Swiss franc cap unchanged * Euro falls vs franc, at 2-month low vs yen * Dollar index eyes 2011 peak (adds quote, details) By Anirban Nag LONDON, Dec 15 (Reuters) - The euro held above an 11-month low against the dollar on Thursday but fell against the yen, with investors concerned about the euro zone debt crisis and a likely recession in the region looking to sell on any upticks. The single currency fell against the Swiss franc after the Swiss National Bank kept its floor on the euro/Swiss franc exchange rate unchanged at 1.20 francs. That disappointed some investors who had built long euro positions on expectations that the SNB would lift the floor to fight deflation in Switzerland. The common currency, which drew some comfort from a successful Spanish bond auction, fell to 1.2252 francs from 1.2340 francs before the decision. The dollar fell to a session low of 0.94042 francs from 0.9469, having risen to a 10-month high of 0.9549 on EBS earlier in the day. "Pressure will remain on the SNB to lift the floor given slowing growth in Switzerland and the euro zone's troubles," said Chris Turner, head of FX strategy at ING. "But right now, the market does not have the appetite to take on the SNB's peg at 1.20. So we expect euro/Swiss to hover around 1.20." The euro was up 0.1 percent against the dollar at $1.2995 , taking a breather from a massive sell-off earlier this week which saw it drop to $1.2945 on Wednesday, the lowest level since Jan. 11, on trading platform EBS. The next major support is at the year's low, $1.2860, hit on Jan. 10. The euro fell to a fresh two-month low against the safe-haven yen at 101.042 yen, not far from a 10-year low of 100.77 yen hit in October. The single currency has lost about 3 percent against the dollar this week after last Friday's European Union summit, seen as crucial to reigning in the debt crisis, failed to come up with near-term solutions to restore investor confidence. "Overall, the outlook for the euro remains dark, with the unravelling of the treaty last week, refusal to lend to the IMF and the overall downside risks to global growth," said Paul Robson, currency strategist at RBS Global Banking. "We expect the euro to fall to $1.26 by the end of Q1 next year." The euro's weakness, plus falls in commodities such as gold and persistent strains in dollar funding markets, have helped lift the dollar index close to its 2011 high. The index was last down 0.2 percent at 80.419, as investors booked profits on long dollar positions. With the European economy headed towards a recession at a time when the U.S. data is showing signs of some improvement, analysts are expecting the euro to stay under pressure while the dollar will be supported into the year end. Flash euro zone PMI surveys on Thursday showed the decline in the private sector eased a little this month, but a recession still looked inevitable with the region's periphery struggling badly.. SPANISH AUCTION Spain sold 6.03 billion euros worth of government bonds, in a sale which analysts said went well. The average yield at a sale of 2.45 billion euros of 2016 bonds was 4.023 percent, down from 5.276 percent at an auction on Dec. 1.. The Spanish sale came hard on the heels of an Italian auction, at which Rome had to pay a hefty 6.47 percent to borrow for five years. But any respite for the euro from the Spanish sale may prove fleeting. The euro area faces the next potential crunch point in mid-January when Italy has to start issuing tens of billions of euros in bonds towards a 2012 total of 340 billion euros needed to roll over maturing debt. The risk of sovereign downgrades also looms large for the euro zone and fears that some member states may develop cold feet with regard to the proposals on tighter fiscal rules that were the centrepiece of last week's summit. "We expect the euro to remain under pressure in the near term," said Jane Foley, senior currency strategist at Rabobank. The dollar eased marginally against the yen to 77.91 yen , having pulled away from last week's low near 77.13 yen over the past few days. Offers from option sellers and exporters are seen in the 78.15-30 area and are likely to cap gains in the dollar, traders said.

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