* Weak German sentiment survey, Spain worries knock euro * More euro losses could see it target 78.87 pence * Pound may get boost from EU farm subsidy payments to UK FREE GUIDES AND REPORTS FROM DIANOMIADVERTISEMENT SIPPs Guide Could you improve your pension with a SIPP? Request Free Guide * Sterling falls versus dollar By Jessica Mortimer LONDON, Sept 24 (Reuters) - Sterling rose against the euro on Monday to its highest level in more than two weeks, lifted by uncertainty over whether Spain will become the latest euro zone member to seek a bailout and after a weaker-than-expected German sentiment survey. The euro was down 0.3 percent to 79.69 pence at 1507 GMT, above a low at 79.55 that was below the 100-day moving average at 79.64 pence and its weakest level since Sept. 7. Sterling fell against the dollar as euro zone worries curbed investor appetite for risk, denting equities and riskier currencies such as the British unit. "The thing that is dominating market sentiment is when Spain will apply for a bailout. And, until that happens, it is weighing on both the euro and sterling, but especially the euro," Credit Agricole currency strategist Adam Myers said. More losses could see the euro break lower and target the early September low of 78.87 pence. A reported options expiry later at 80.00 pence may influence trade and keep the euro close to that level, traders said. Spanish economy minister Luis de Guindos said on Saturday the country would not rush to seek external aid. The European Central Bank's plan to ease the region's debt crisis by buying indebted countries' bonds has supported the euro. It cannot implement its plan until a country requests aid. There was also concern about Greece which has yet to agree a deal on an austerity package with international lenders. The euro was also knocked by a weaker-than-expected German Ifo sentiment survey which raised concerns that the currency bloc's largest member may be struggling, while traders cited euro selling by a European central bank. FALLS VERSUS DOLLAR Sterling was down 0.2 percent at $1.6194, pulling back from a 13-month peak at $1.6310 reached on Friday when it was helped by British borrowing data that was not as bad as many in the market had expected. The pound may get a lift from farm subsidy payments due on Friday and which the European Union makes to Britain, with talk this could be as much as 3 billion euros ($3.9 billion), as well as from reported flows related to a dividend payment, traders said. ING analysts forecast the pound would rise this week, buoyed by the farm subsidy payments while the dollar should stay weak following the U.S. Federal Reserve's aggressive monetary easing earlier this month. This could lift sterling as high as $1.65/$1.66, they said. For Michael Derks, a currency strategist at FXPro, falls in the euro against sterling may represent a buying opportunity. "We could start to see the euro bounce a bit. A lot of people are still very short of euros and sentiment has changed more towards people looking to buy (euros) on any weakness"

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