* Spain's bond yields rise to five-month highs * Euro zone worry overshadows strong U.S. retail sales * Weaker Q1 U.S. corporate earnings aid bond bid By Chris Reese NEW YORK, April 16 (Reuters) - U.S. Treasuries rose on M onday as worries about the euro zone, particularly Spain's rising cost of borrowing, fed demand for safe-haven U.S. government debt. Gains were limited however, as higher-than-expected retail sales for March and some strength in U.S. stocks diminished a bit of Treasuries' safety allure. Spanish 10-year government bond yields broke through the 6 percent mark for the first time since the beginning of December. Spain has acknowledged that it has probably tipped into its second recession since 2009. That situation drew investors to safe-haven assets like German bunds and U.S. Treasuries, with benchmark 10-year Treasury notes trading 4/32 higher in price to yield 1.98 percent, down from 1.99 percent late Friday. Yields on Monday touched 1.95 percent, marking the lowest in six weeks. "The Treasury market found a bid again on Monday, owing less to the mix of economic data and more to the growing concerns with European sovereign and banking credit," said Ian Lyngen, government bond strategist at CRT Capital Group in Stamford, Connecticut. "Spain remains the focal point driving flight-to-quality demand for Treasuries and given the volatility and uncertainty of the impact of higher borrowing costs in the region we expect these concerns to persist," Lyngen said. The euro hit a two-month low against the dollar and yen as higher Spanish bond yields reflected fresh worries about the country's economic predicament. The conservative Spanish government says it is committed to making major budget cuts, but investors worry a recession could make it impossible to meet deficit targets and that Spain would have to seek some kind of international bailout, like Greece, Ireland and Portugal. "Debt and growth conditions in Europe are weakening and Treasuries have extended recent gains as Spanish bond yields extend recent losses," said William O'Donnell, managing director and head of U.S. Treasury strategy at RBS Securities in Stamford, Connecticut. Monday's U.S. retail sales data had little impact on bond market participants' perceptions of Federal Reserve policy. Sales rose 0.8 percent, more than expected in March, as Americans took high gasoline prices in stride and bought a range of goods, suggesting the economy's growth in the first quarter did not slow as much as many had feared. But analysts said the market was more focused on the euro zone. Appetite for Spanish debt will be tested on Thursday when Spain issues bonds in the primary market. Unless robust U.S. economic data presents a challenge, 10-year U.S. Treasury yields could remain near or below 2 percent on euro zone concerns. Those concerns argue for an extended period of monetary easing and further steps along that course, a bullish path for bonds. Thirty-year bonds traded 8/32 higher to yield 3.12 percent, down from 3.13 percent late Friday.