* Sterling hits 19-month high vs weak euro of 82.10 pence * S&P affirms UK AAA rating, euro zone worries grow * Pound holds near 19-month trade-weighted peak, dips vs dollar * Weak UK jobs data on Weds could hamper pound's rise By Jessica Mortimer LONDON, April 16 (Reuters) - Sterling rose to its highest in 19 months against the euro on Monday and was poised for more gains as concerns about budget problems in Spain caused Spanish borrowing costs to jump and prompted investors to seek alternatives to the common currency. The pound also benefited after Standard & Poor's reaffirmed Britain's top-notch AAA credit rating on Friday, reflecting an expectation that the government will continue to consolidate its public finances. This encouraged investors to flock to sterling assets as Spanish 10-year government bond yields broke above 6 percent for the first time this year, sparking concerns about the prospect of a new bout of financial stress in the euro zone. "Sterling has gained a modicum of support from the S&P comments, but it's really all about euro zone bond yields," said Richard Driver, analyst at Caxton FX. "If bond yields keep creeping up it will raise major concerns about the firewall (designed to prevent contagion from the euro zone debt crisis) and the euro will come under further pressure. We definitely see euro/sterling below 82 pence". The euro lost around half a percent on the day to hit 82.10 pence, its weakest since September 2010, stopping just above reported options barriers at 82.00 pence. Some analysts say Spanish 10-year borrowing costs above 6 percent would be unsustainable if maintained for an extended period. Italian bond yields also rose on Monday. Sterling could now be on track to test its August 2010 high of 81.79 pence and then the June 2010 peak of 80.67 pence. Many analysts believe it may break beyond the key 80 pence per euro level for the first time since late 2008. Sterling's trade-weighted index stood at 82.2, near last week's 19-month high of 82.4, according to Bank of England data. The pound's rate against the euro makes up around 50 percent of that index. FOCUS ON ECONOMY The pound has benefited as recent economic data has hinted at signs of improvement in the UK while the euro zone economy stutters. However, the UK economy remains fragile and sterling could come under pressure if UK jobs data on Wednesday are weak or if Bank of England minutes on the same day suggest further quantitative easing remains a possibility. The pound's gains could also be hampered if UK policymakers start to express concerns about sterling's recent gains and the potential damage its strength might do to exports. However, most analysts see this as unlikely for the time being as sterling's gains have been fairly gradual and it is still considered relatively weak on a long-term comparative basis. No major data was due for release on Monday, but investors will watch for UK inflation figures on Tuesday. Euro zone worries weighed broadly on riskier currencies against the safe-haven dollar, however, pushing sterling down 0.1 percent to $1.5826 and taking it close to the late March low of $1.5801. "Sterling remains firm against the euro and solid against the dollar, but continued euro weakness should logically undermine sterling/dollar from here," analysts at Lloyds said in a note to clients.

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