* Spanish banks' reliance on ECB stokes fears on debt crisis
* Disappointing China GDP weighs on risk sentiment
* Commodity-sensitive Aussie dollar falls on China GDP
By Julie Haviv
NEW YORK, April 13 (Reuters) - The euro dropped against the dollar for the first time in three days on Friday, as a rise in Spain's borrowing costs revived worries about the euro zone and disappointing Chinese data spurred global growth concerns.
The single currency slumped to the low end of a range against the greenback that has held since January on news that Spain's banks are virtually locked out of credit markets and relied heavily on cheap loans from the European Central Bank in March.
The cost of credit default swaps to insure Spanish debt against default rose to a record high, adding to risk aversion after China reported first-quarter economic growth that fell short of expectations.
"The euro is down on renewed concerns over the Spanish economy and as the CDS moved to record levels," said Douglas Borthwick, managing director at Faros Trading in Stamford, Connecticut. "The worse-than-expected Chinese GDP data also put a damper on risk in general, leading to dollar buying across the board."
The euro was last down 0.8 percent versus the dollar at $1.3076, on the lower end of the $1.30-$1.35 range it has traded in since January.
Against the yen the euro was down 0.7 percent at 105.88 .
The dollar's gains were broad-based, with the greenback even rising 1 percent against the traditional safe-haven Swiss franc to hit a session high of 0.9201. Against the yen, the dollar was up 0.1 percent at 80.94.
"The risk on/risk off theme is heating up as Spanish peripheral spreads widen out significantly," said George Davis, chief technical analyst at RBC Capital Markets in Toronto.
"We are seeing the traditional reaction in that stocks are selling off, core bond markets are rallying, the dollar is rallying and commodities are getting hit," he said. "So, this theme may have 'legs' and continue to play out over the next few weeks - and it bears watching."
Uncertainty about the euro, however, has fallen as reflected in the options market, with three-month risk reversals in the euro/dollar still biased for euro puts, trading at -2.08 vols on Thursday, but improving from -3.5 vols in mid-February.
The Australian dollar, which reacts strongly to Chinese data because Australia's commodity-driver economy relies heavily on Chinese demand, fell to a session low of US$1.0352.
The Aussie had gained of 1.2 percent on Thursday on a surprisingly strong local jobs report and solid bank lending data from China.
"We view yesterday's strong Australian employment and Chinese loan data as more important than the overnight Chinese Q1 GDP release and hence see the overnight sell-off in AUD as providing good levels to go long," Nomura analyst Geoff Kendrick said in a note.