FOREX-Euro falls on uncertainty over Greece, Spain
* Euro slips, weighed down by Greek and Spanish concerns
* Yen's upside capped as BOJ expected to ease on Tuesday
* Light U.S. trading expected as storm nears East Coast
By Anirban Nag
LONDON, Oct 29 (Reuters) - The euro fell on Monday, hurt by uncertainty over whether Greece can agree to a deal on austerity and with no sign of when Spain might request aid.
The single currency was expected to stay subdued against the dollar and the yen with investors preferring safe-haven currencies, also on renewed worries about weak earnings from top companies in the region.
Near-bankrupt Greece needs a comprehensive deal on an austerity package to unlock its next tranche of aid before it runs out of cash in mid-November. International lenders have refused to make more concessions on changes to labour laws contested by a junior coalition partner, prolonging the impasse on a reforms package and weighing on the euro.
The single currency was down 0.4 percent at $1.2895, not far from a two-week low of $1.2882, with bids from sovereign investors cited at $1.2850. Technical analysts saw support at its 200-day moving average of $1.2835.
The euro bought 102.65 yen, down 0.5 percent and well off a six-month peak of 104.59 yen reached on Oct. 23.
A Spanish bailout would enable the European Central Bank to buy the country's bonds. Unless Spain seeks a rescue, sentiment towards the euro is unlikely to turn positive, traders said.
Italian Prime Minister Mario Monti meets Spanish Prime Minister Mariano Rajoy on Monday and while little is expected from the meeting, some expect Italy to keep pushing Spain to seek a bailout as it would lower borrowing costs for other peripheral euro zone countries.
"Greece has come back to the radar and along with Spain, it poses a slight negative for the euro," said Jeremy Stretch, head of currency strategy at CIBC World Markets.
"That, along with a risk-negative environment, means the dollar will be bid, though we expect the euro to find support at its 200-day moving average."
Traders expect activity will be thin as Hurricane Sandy is expected to slam into the U.S. East Coast later on Monday. U.S. stock and options markets will be closed on Monday, and possibly Tuesday, as regulators, exchanges and brokers worry about the integrity of markets and the safety of employees.
The yen steadied well above last week's lows with many speculators already running significant short positions against the yen before ahead of the Bank of Japan meeting on Tuesday.
The dollar bought 79.60 yen, flat on the day and well below Friday's four-month high of 80.38 yen. The greenback remains well above its early October low of 77.79 yen, with support cited at its 200-day moving average, now at 79.51 yen.
The BOJ is expected to further ease monetary policy and might make a stronger commitment to keep pumping in cash until its 1 percent annual inflation target is achieved, sources have said.
"BOJ easing expectations were a big factor for markets last week, but are not having much impact this week, with the likely outcome already factored in," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.
Data on Friday showed currency speculators had hiked their bets against the yen, with the market posting a net short position for the first time since May.
However, some said the yen could weaken further no matter what the BOJ outcome. Should the central bank even refrain from easing as strongly as the market expects, futures and options market data suggests the yen's underlying soft trend will remain intact.
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