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* Euro rises to session-high after strong Spanish bond auction
* Gains limited ahead of ECB meeting on Thursday
* ECB seen holding rates steady
* BOJ easing expectations keep pressure on yen
By Anooja Debnath
LONDON, Jan 10 (Reuters) - The euro rose against the dollar and the yen on Thursday after strong demand at a Spanish bond auction, but further gains were likely to be limited before a European Central Bank interest rate decision.
The single currency rose to a session high against the dollar and the yen after Spain's Treasury sold 5.8 billion euros of bonds, exceeding its target range of 4 billion-5 billion euros.
The euro rose to $1.31065, from $1.3085 before the auction results, and was up 0.3 percent on the day. Traders reported stop-loss buy orders at $1.3110 and $1.3115.
Against the yen, the euro hit a session-high of 115.50, close to an 18-month high of 115.995 hit in early January. It was last up 0.5 percent at 115.34 yen.
"The Spanish bond auction was better than expected and that saw the euro rise," said Alexandre Dolci, FX strategist at BBVA.
"But the market is awaiting signals from the ECB over how serious it is on delivering further near-term policy easing. Depending on the rhetoric used in the press conference, the euro is either going to hold the $1.31 ground or to slip back towards $1.30."
While the ECB is widely expected to keep rates on hold when it meets later on Thursday, some traders have positioned for a risk of a rate cut.
ECB President Mario Draghi is scheduled to address a press conference at 1330 GMT and investors will keep an eye for any indications of future easing in monetary policy. If there are no such hints, the euro could edge up.
Reported bids from Asian central banks at $1.3040, however, were likely to limit any falls in the euro. Chart support was expected near $1.3000 it's 50 and 55-day moving average.
"The euro has struggled to sustain any rallies past $1.30-$1.40 in the past few weeks. With economic data out of the euro zone not looking good, it is difficult to construct a bullish story for the euro," said Peter Kinsella, currency strategist at Commerzbank.
The dollar neared a 2-1/2-year high against the yen on Thursday, with the Japanese currency looking susceptible to further losses on increasing bets of easier policy by the Bank of Japan.
The dollar was up 0.5 percent on the day at 88.30 yen , not far from 88.48 yen hit on Friday, its highest level since July 2010. The yen gave up most of its gains earlier this week.
"We can definitely see the trend of yen weakness continue," Commerzbank's Kinsella said.
"Data for China last night was very good and that was good for risk in general and bad for safe-haven currencies, like the yen, which weakened on the back of that. The BOJ increasing its inflation target poses a further risk to the yen."
China's export growth showed a surprisingly sharp rebound in December to a seven-month high, which saw growth-linked currencies such as the Australian dollar hit a three-week high against the dollar at $1.0568.
Traders reported strong demand for options betting on further yen weakness, with one-month dollar/yen implied volatility - a measure of expected price movement - rising to its highest since March 2012.
One-month risk reversals showed demand to buy yen puts - or bets on the yen falling - rising sharply to 0.95, up from around 0.4 at the start of the week.
Yen moves will probably be volatile ahead of the BOJ's Jan. 21-22 policy meeting. The Japanese central bank is widely expected to heed Prime Minister Shinzo Abe's call for adopting a 2 percent inflation target at its next policy meeting.