* Euro hits 3-week lows against dollar, 4 weeks versus yen * Euro zone debt concerns rise on rise in Spanish yields * SNB steps as euro dips under 1.20 francs floor By Julie Haviv NEW YORK, April 5 (Reuters) - Fears about Spain's high debt level pushed the euro down broadly on Thursday to its lowest level against the dollar in three weeks and prompting the Swiss National Bank to take action to curb the franc's strength. The euro fell for a fourth straight day against the greenback as a jump in Spain's borrowing costs made investors nervous about the country's ability to meet budget targets that could mark another escalation of the euro-zone debt crisis. With the euro zone engulfed in a debt crisis, the European Central Bank's policy should remain accommodative, with dovish comments by ECB president Draghi on Wednesday affirming thzt notion. That contrasts with the U.S. Federal Reserve, which this week downplayed expectations of adding more stimulus. As the U.S. economy improves, U.S. short term rates could start rising before ones in the euro zone, eliminating one of the key weaknesses for the dollar. "Spain is not Greece and is a much bigger contributor to GDP, so the jump in yields is a very valid concern right now," said Dan Dorrow, director of research at Faros Trading in Stamford, Connecticut. "The euro zone firewall set up is not big enough to save Spain," he said. "If the ECB were the Fed right now they would be embarking on quantitative easing or lowering rates, but the ECB is more passive in its approach, which is dangerous, and I think they are walking a tight rope." Against the dollar, the euro was down 0.6 percent at $1.3064, having hit a three-week low of $1.3033. It also hit its lowest in four weeks against the yen at 106.86 yen before recovering to trade at 107.54 yen, still down 0.7 percent. In the options market, three-month risk reversals in the euro/dollar showed a bias for euro puts, reaching a low of -2.30 vols on Thursday versus -1.90 vols the previous session. It last traded at -2.10 vols. The bias against the euro, however, has been improving since early March when it reached a low of -2.81 vols. A negative risk reversal indicates the volatility of put options is higher than the volatility of call options, with more investors betting on a fall than a rise. A U.S. government report on new jobless benefits added to the dollar's allure against the euro. The U.S. outlook is increasingly contrasting with Europe where separate reports showed German industrial output fell more than expected in February and British factory output suffered its biggest monthly fall in almost a year After holding interest rates at a record low of 1.0 percent on Wednesday, ECB's Draghi said downside risks to the economic outlook "prevailed" and dismissed talk of an exit strategy from accommodative policy measures. SNB BUYS Broad euro selling led the euro-zone single currency to dip below 1.20 Swiss francs for the first time since the SNB set that level as a cap for the Swiss currency in September 2011 in a bid to curb a sharp rise caused in part by investors fleeing the euro. The euro hit a low of 1.1992 francs, according to Reuters data, before recovering to last trade at 1.2020. Traders said the SNB was buying euros around 1.20. An SNB spokesman said the bank would do all it could to defend the cap. Traders said the SNB's determination may make investors wary of testing their resolve again, but renewed euro zone debt worries may mean the central bank will have to step in again. "If we continue to see Spanish yields pushing out, the euro should broadly come lower, and I'm happy to stick with a short position for now, looking to take profit near $1.3000," said Jeremy Stretch, head of currency strategy at CIBC in London "There's a realization that structurally the periphery of Europe remains under extreme stress." Traders reported thin market conditions ahead of the Easter holiday and the U.S. March nonfarm payrolls report on Friday. The U.S. economy is expected to have added 203,000 jobs last month after February's 227,000 increase. Against the yen, the dollar last traded down 0.2 percent at 82.34.