* Euro falls, erasing earlier gains as Spain worries grow * Spain's Montoro says financial markets closing to Spain * Market awaits any clues from G7 conference call NEW YORK, June 5 (Reuters) - The euro slipped on Tuesday as Spain's treasury minister said high borrowing costs meant credit markets were closing to Spain and investors received little comfort from an emergency conference call of Group of Seven finance chiefs. The dollar climbed to a fresh session high against the yen after Japan's Finance Minister Jun Azumi said a strong yen is damaging Japan's economy. But it was the G7 call that disappointed investors when a Japanese Ministry of Finance official said there would be no G7 statement to follow the teleconference.. The G7 ministers and central bankers held the call to discuss the euro zone's worsening debt crisis, although the chances of a significant breakthrough had always looked slim. "None of these meetings have produced anything meaningful, and with debt burdens piling up across the globe, I remain highly doubtful that anything substantive will be implemented, and anything that falls short of fiscal union in Europe will allow the crisis to proliferate," said Christopher Vecchio, currency analyst at DailyFX in New York. In a later statement, the U.S. Treasury Department said G7 finance ministers discussed progress towards a financial and fiscal union in Europe. [ID:nW1E8EM02J}. After Tuesday's G7 finance ministers conference call, investors are now waiting for the ECB policy meeting on Wednesday, Federal Reserve chairman Bernanke's testimony to the U.S. Congress on Thursday, and the Greek elections and G20 meeting in Mexico which are both on the weekend of June 17. The G7 talks boosted the euro earlier but it fell after Spain's Treasury Minister Cristobal Montoro highlighted the funding problems facing the euro zone's fourth largest economy. Investors worried that the country may have to seek external aid. The euro was further pressured when German regulator Bafin on Tuesday said moves to create a banking union in Europe were premature. [ID:nL5E8H54VQ}. The single currency was last down 0.4 percent at $1.2442 after falling to a session low of $1.2409, more than a cent below an earlier one-week high. On Friday, it had hit a two-year low of $1.2286, using Reuters data. "People will be happy to sell into moves above $1.25," said Anders Soderberg, currency strategist at SEB in Stockholm. The euro has recovered since weak U.S. jobs data on Friday weighed on the dollar, feeding speculation about the prospect of another bout of monetary easing in the United States. But Soderberg said this was merely "a short-term break in what now seems to be a well-established downtrend". Investors also are worried about the risk that a Greek election in two weeks could push Athens out of the euro. The depths of the problems facing the euro zone were underlined by a purchasing managers' survey showing the bloc's private sector economy shrank at the fastest pace in nearly three years in May. Euro zone retail sales and German industrial orders were also worse than forecast. It also erased the euro's earlier gains against the yen and the euro zone common currency was last down 0.1 percent at 97.81 yen. This still left it comfortably above Friday's low of 95.57 yen, using Reuters data, the lowest since December 2000. Against sterling, the euro fell 0.3 percent to 81.00 pence , off an earlier one-month high of 81.41 pence. CENTRAL BANK ACTION The G7 talks prompted some market players to speculate that the European Central Bank could opt for some form of further monetary stimulus when it meets on Wednesday. International Monetary Fund Managing Director Christine Lagarde said in an interview with a Swedish newspaper that the ECB had room for another interest rate cut. There has been some talk of a cut, although a recent Reuters poll showed only 11 out of 73 analysts polled expected a move this month. In a sign of increasing concern about the impact of the euro zone debt crisis, the Reserve Bank of Australia cut interest rates by 25 basis points on Tuesday. The Australian dollar was little changed at $0.9723, as the rate cut was less than the 50 basis points some had expected. Traders will be looking to testimony by U.S. Federal Reserve Chairman Ben Bernanke on Thursday for any hints on the possibility of more quantitative easing. The dollar was up 0.3 percent at 78.57 yen, almost a full yen from Friday's 3-1/2-month low of 77.65 yen, using Reuters data. Investors were still wary however, about the possibility of Japanese authorities stepping in to stem the yen's rise.