WELLINGTON/SYDNEY, Oct 10 (Reuters) - The Australian and NewZealand dollars held gains on the euro on Wednesday but were onthe defensive elsewhere as concerns over Spain continued tosimmer and sap risk appetite.
* Euro steady but nursing hefty losses at A$1.2618, following large overnight liquidations of euro longpositions.
* It has slipped 1.6 pct since a four-month peak of A$1.2824on Friday. Charts look bearish after euro failed to hold aboveA$1.2800. Key support seen at A$1.2575/85, the 10-day MA and Oct3 low.
* Likewise, euro dips to NZ$1.5772 vs the kiwi,more than 1 percent lower in three sessions.
* Euro hurt due to uncertainty regarding Greece and Spain.European Central Bank chief Mario Draghi told a EuropeanParliament committee that Greece has made progress on reformingits economy, but has more work to do.
* Antipodeans retreat against a broadly stronger U.S. dollarwith the Aussie at $1.0190, from $1.0203 early, not farfrom a three-month trough of $1.0149 hit on Monday.
* Aussie touched a high of $1.0259 on Tuesday, underpinnedby a 12 pct surge so far this week in spot iron ore prices.
* Support seen around $1.0175, then $1.0150, while sellerslined up around 100-DMA of $1.0249.
* NZ dollar falls to a one-week low at $0.8145,from $0.8174 early. Last at $0.8154 with next support found near$0.8135, the 55-DMA and the Sept 10 high, with $0.8190 cappingthe topside.
* Kiwi down 1.5 pct vs the greenback so far this month,compared with Aussie's 1.7 pct drop. Markets expect more ratecuts in Australia vs steady rate outlook in NZ.
* Also weighing on risk appetite is a slowdown in China andsubdued economic data in Australia. Investors now focused onAustralia's jobs report due out on Thursday.
* The Reserve Bank of Australia (RBA) warned on Tuesday thelabour market could be softer than suggested by the low joblessrate. A disappointing report would add to the case of furthereasing following a 25 basis points-cut to 3.25 pct last week.
* Interbank futures pricing implies a 64 percentchance of another quarter of a point cut next month.
* Australian consumer sentiment survey shows a modestimprovement for October with people happier about their financesand on buying a new home.
* Muted response in markets after NZ's budget deficit halvedin the 2011/12 fiscal year but the improvement was still lessthan expected, underscoring the government's challenge ofreturning to surplus in three years. ID:nL3E8L81TH]
* Finance Minister Bill English, who is overseas, did notmake specific mention of the government's plan to return thebudget to surplus by 2014/15, but did say spending cuts wereneeded to achieve a surplus.
* NZ government bonds hold gains, with yieldsstill down 1 basis point along the curve.
* Australian government bond futures flat with three-yearcontract at 97.650, and the 10-year contract at97.035.
((Australia/New Zealand bureaux)(+61 2 9373 1800/+64 4 8027980))
Keywords: MARKETS AUSTRALIA NEWZEALAND/FOREX