* ECB holds rates steady, gives no hint of further easing * Euro also boosted as Spain hits top end of target at bond sale * Dollar/yen hits highest since August 2009 By Gertrude Chavez-Dreyfuss NEW YORK, March 7 (Reuters) - The euro rallied on Thursday, posting its largest one-day gain in two months against the dollar, as European Central Bank President Mario Draghi gave no indication that the bank would cut interest rates further in the euro zone. The ECB, which kept interest rates steady, had been expected to lower its inflation and growth forecasts, giving Draghi room to cut rates and support recession-hit economies in the coming months. The bank did lower its growth forecast for the currency bloc for 2013, but Draghi said he expects economic activity to gradually recover, given firming global demand. He also said inflation expectations "remain firmly anchored," in line with the ECB's aim of maintaining inflation rates below but close to 2 percent over the medium term. That should allow the ECB's monetary policy stance to stay loose. People have also underestimated the political commitment to the euro at their own cost, the ECB chief added. "Draghi played cheerleader, transmitting a bit of hope to the euro FX rate, but leaving no room for an added ECB boost to the business cycle," said Dan Dorrow, head of research at FX broker Faros Trading, in Stamford, Connecticut. But he added that despite the euro's appreciation, he viewed Thursday's ECB comments, including the growth and inflation forecasts, as negative for the euro zone's shared currency in the medium term. "Growth differentials will increasingly matter for FX rates in a global environment with receding tail risks," said Dorrow. "The ECB is the most behind the curve among G4 central banks (U.S., UK, euro zone, and Japan) in terms of providing policy support for the business cycle - despite the fact that the euro zone's growth outlook is the worst among the G4 economies." The euro shot up 1.1 percent for the day to $1.3107. The session peak of $1.3118 marked a five-day high. Some US$5.2 billion in euros changed hands, using Reuters Dealing.. Healthy demand at a Spanish debt auction also eased some investors' concerns about the euro zone. Spain sold 5 billion euros of bonds, hitting the top end of its targeted amount at reduced borrowing costs despite political uncertainty in Italy. Marc Principato, director of SMB Forex Trading And Education in New York, said the single currency, after breaching minor resistance at $1.3050, faced significant challenges between $1.3250 and $1.3300 in the coming week. Most analysts say that even if borrowing costs for highly indebted euro-zone countries like Spain and Italy do not rise, on a more fundamental basis, the struggling euro-zone economy will need a more accommodative monetary policy stance along with a weaker currency to boost growth. Against the yen, the euro surged nearly 2.1 percent to 124.57 yen, its highest in more than a week. It was last at 124.32 yen, up 1.9 percent, its best one-day performance since Feb. 11. STERLING JUMPS Sterling rebounded from a 2-1/2-year low against the dollar and last traded at $1.5026, little changed , after the Bank of England decided not to resume its quantitative easing program. Many investors had bet against the pound in recent weeks on expectations that a grim UK economic outlook would prompt the central bank to pump in more liquidity. The BoE's bank rate is at a record low of 0.5 percent. Against the yen, the dollar was up 0.9 percent at 94.94 yen , after touching a session peak of 95.06, the highest since August 2009. Some US$2.7 billion in yen changed hands, using Reuters Dealing. Earlier on Thursday, the Bank of Japan kept monetary policy unchanged, but the yen weakened against the dollar on expectations of aggressive easing in the future. "The incoming governor at the Bank of Japan won't wait long to infuse bolder monetary support into the weak Japanese economy," said Joe Manimbo, senior market analyst at Western Union Business Solutions, in Washington. Some strategists have revised their forecasts to show sustained yen weakness. UBS, for instance, raised its year-end forecast for the dollar to 100 yen from 85 yen.