FOREX-Euro rises as China GDP spurs short-covering

* Euro and Aussie rise on short-covering

* China's economy slowed less than expected in Q4

* Euro rise gains steam after hitting stops

* Japan finmin's jawboning also spurs euro buy backs

* Greek debt swap deal talks in focus

By Masayuki Kitano

SINGAPORE, Jan 17 (Reuters) - The euro rose on short-covering on Tuesday as risky assets drew broad support from data showing China's economic growth slowed less than expected in the fourth quarter.

The euro rose 0.5 percent to $1.2729, its gains accelerated by stop-loss buying and pulling away from a 17-month low of $1.2624 hit last week on trading platform EBS.

The single currency also climbed 0.4 percent against the yen to 97.62 yen, staying above an 11-year low of 97.04 yen struck on Monday.

The rise in the euro was a reflection of market positioning as much as anything else, said Hiroshi Maeba, managing director of foreign exchange trading at Nomura Securities in Tokyo.

"All that is happening is short-covering in currency pairs such as Aussie/yen and euro/yen," Maeba said.

The euro may push higher in the near term as there are still some stop-loss bids lurking higher up, but its downtrend is likely to remain intact, he added.

"There are still many reasons to be concerned and we are still in a situation where we need to keep in mind the possibility of default (of Greece's debt)," Maeba said.

"We might see some short-covering because of the way the market is positioned but the overall direction for the euro is probably downwards," Maeba added.

Traders said the market is keeping a close eye on talks between Greece and private sector creditors on a debt swap deal, which broke down last week but were expected to resume on Wednesday.

Cash-strapped Athens needs a deal with the private sector within days to avoid going bankrupt when 14.5 billion euros of bond redemptions fall due in late March.

There was little market reaction to U.S. rating agency Standard & Poor's decision on Monday to cut its credit rating of the European Financial Stability Facility, the euro zone's rescue fund, by one notch to AA+.

Market reaction was muted as the move was well expected. S&P itself said the decision was all but inevitable following cuts to the creditworthiness of France and Austria, two of the EFSF's guarantors, that it had announced late last week.

CHINESE DATA

The euro and the Australian rose after China's fourth quarter gross domestic product (GDP) growth exceeded market expectations.

China's economy grew at its weakest pace in 2-1/2 years in the fourth quarter as gross domestic product slowed to an annual rate of 8.9 percent, the National Bureau of Statistics said on Tuesday.

The reading, however, came in above market expectations for growth of 8.7 percent.

The Australian dollar climbed 0.7 percent to $1.0385 and rose 0.5 percent versus the yen to 79.58 yen .

In addition to the better than expected Chinese data, verbal jawboning from Japanese Finance Minister Jun Azumi helped spur buy backs in euro/yen, said Nomura Securities' Maeba.

Speaking in the wake of the previous day's drop in euro/yen, Azumi said on Tuesday that he was closely watching the impact of a weak euro on Japanese exporters.

Asked about the need to intervene in the foreign exchange market to respond to the weakening euro, Azumi said he wanted to carefully examine current movements in currency rates.

Rob Ryan, FX strategist for BNP Paribas in Singapore, said the possibility of Japanese yen-selling intervention might increase if the yen were to start rising broadly.

"It's pointless to try and stop the slide of the euro against everything. Maybe they have to wait until the risk-off hits the market," Ryan said.

"When you start to see Aussie/yen, and dollar/yen and euro/yen all slide together then you have the green light for action," Ryan added.

The dollar dipped 0.1 percent against the yen to 76.68 yen . Japan conducted massive yen-selling intervention late last October after the dollar hit a record low of 75.311 yen.