* Euro gains as stocks rise; pushes above chart resistance * Vulnerable to further rise in peripheral bond yields * Yen hits 6-week high vs dollar By Jessica Mortimer LONDON, April 11 (Reuters) - The euro rose against the dollar on Wednesday as gains on stock markets encouraged traders to push it through resistance levels, but it stayed vulnerable to further selling as worries about indebted euro zone countries persisted. Analysts said the single currency could succumb to another bout of weakness if low-rated euro zone government bonds come under further selling pressure, with Spanish 10-year yields hovering close to 6 percent. A weak auction of German 10-year bonds weighed a little on the euro, but traders said market players were encouraged by the fact that peripheral bond yields did not rise as a result. "Spreads in peripheral Europe did not widen on the (German) auction which was taken as a positive. Everyone was short the euro from yesterday, so we have just done the stops and are squeezing people out," a London-based trader said. European stocks moved higher, encouraging investors to buy riskier assets, including the euro. The common currency was up 0.5 percent at $1.3141, having hit a high of $1.3157, with traders saying it was propped up by demand from hedge funds as well as sovereign names earlier reportedly buying on dips. Stop-loss buy orders were triggered above the 100-day moving average around $1.3136 and Tuesday's high of $1.3145, they said. The euro also gained some relief from comments by European Central Bank Executive Board member Benoit Coeure that the bank's bond-buying programme remained an option. Despite Wednesday's climb, strategists said the shared currency remained vulnerable. Rising Spanish bond yields have exacerbated concerns about the fragility of peripheral euro zone economies in a market already hurt by last week's disappointing U.S. jobs report and soft Chinese imports. "People are still worried about the euro zone but there have been too many sellers in the past few days. It's a case of one step forward and two steps back for the euro," said Geoffrey Yu, currency strategist at UBS. Yu said sustained Spanish and Italian yield spread widening would be enough to push the euro below $1.30, the bottom of its recent range. Technical analysts said a move below support at the bottom of the daily Ichimoku cloud - a closely watched technical indicator - around $1.3055 and below Monday's one-month low of $1.3033 could pave the way for a firm break towards $1.30. "Unless the euro goes through $1.3175 the path of least resistance is for a move towards $1.3004 (the March 15 low)," said Jeremy Stretch, head of currency strategy at CIBC. YEN RALLIES VS DOLLAR The dollar was up 0.20 percent at 80.83 yen, having earlier dropped to 80.568 yen on the EBS trading platform, its lowest level since Feb. 29. Traders reported strong bids around 80.50-55 which limited dollar weakness. The Japanese currency was supported by safe-haven flows due to concerns about global growth and after the Bank of Japan refrained from further monetary easing on Tuesday. But analysts said expectations that the BoJ may increase its asset purchase at its policy meeting on April 27 could put the yen back under pressure in the coming weeks. Sources told Reuters the Bank of Japan will consider easing monetary policy at that meeting. The euro was up 0.7 percent at 106.24 yen, recovering from an earlier seven-week trough of 105.44 yen. The riskier Australian dollar recovered to trade up 0.6 percent at $1.0312, having earlier dropped to $1.0226 , its lowest since January. The Aussie also hit 82.52 yen, a level not seen since early February. (Additional reporting by Nia Williams; editing by Stephen Nisbet)

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