FOREX-Euro falls as market doubts rescue package

* Relief effects of emergency aid package prove temporary

* Focus back on structural problems plaguing euro zone

* Unconventional ECB measures to weigh on currency

(Adds quotes, detail; previous TOKYO)

By Neal Armstrong

LONDON, May 11 (Reuters) - The euro fell on Tuesday as the relief effects of an emergency aid package to prevent the spread of a European debt crisis dissipated and focus switched back to structural problems plaguing the euro zone.

European Union finance ministers, central bankers and the International Monetary Fund hammered out an emergency package of loan guarantees to euro zone members over the weekend to try and sure up sentiment in its bond markets and the euro. [ID:nSGE6490HH]

The "shock and awe" plan initially boosted sentiment, allowing the euro EUR= to surge to near $1.31 on Monday, rebounding from a 14-month trough of $1.2510 hit on trading platform EBS last week when investors had feared a sovereign credit crisis could spread from Greece to other euro zone countries.

At 0725 GMT, the euro had slipped back to trade with losses of around 0.4 percent at $1.2725.

"Monday was a relief rally and now it's back to reality as people are looking at the facts. Greece has to consolidate its finances and the euro is still not attractive," said Antje Praefcke, currency strategist at Commerzbank.

Investors doubt whether the Greek government will be able to carry out the austerity measures required to restructure its public finances. Other states such as Portugal and Spain also have budgetary concerns.

Moody's Investors Service on Monday said it may still downgrade Portugal and Greece's rating could fall to as low as junk grade. [ID:nN10227186]

The euro fell 1.1 percent to 117.45 yen EURJPY=R, a day after jumping around 4 percent versus the Japanese currency.

Analysts said unconventional policy measures being introduced by the European Central Bank would also weigh on the euro.

"The ECB has introduced nonconventional measures at a time when other G10 central banks are starting to normalize policy, which should keep the euro weaker, particularly as euro zone member nations embark on fiscal tightening," said UBS analysts in a note.

UK POLITICAL POSTURING

Political uncertainty put pressure on sterling as Britain's two big rival political parties planned to resume courting the Liberal Democrats after Prime Minister Gordon Brown said he would step aside to try to keep his Labour Party in power. [ID:nLDE6492UW]

Sterling was trading down around 0.1 percent versus the dollar GBP=D4 at $1.4821 after coming back under pressure late Monday in a knee-jerk reaction to PM Brown's announcement.

The dollar was down 0.8 percent at 92.37 yen JPY=. Traders said the yen was helped by Japanese exporters selling other currencies.

The yen also got a lift from a Reuters report quoting sources familiar with the matter as saying Mizuho Financial Group Inc (8411.T), Japan's second-largest bank, plans to issue about $8.7 billion of common shares. [ID:nTOE6490A6]

The yen's climb picked up pace as stocks slipped into negative territory in Asia, prompting investors to reduce risks.

The Australian dollar slid 1.5 percent to 82.85 yen AUDJPY=R after surging over 3 percent on Monday.

MSCI's index of Asia-Pacific shares outside Japan lost 1.35 percent .MIAPJ0000PUS after climbing 3.4 percent on Monday for its biggest single-day percentage gain since May 2009.

(Additional reporting by Rika Otsuka, editing by Jason Webb)