FOREX-Euro slides on fears over global growth, Spain's debt

* Euro falls to 1-week low versus dollar

* Spanish debt yields rise as Moody's downgrades 5 regions

* Yen under pressure on BoJ speculation

* Canadian dollar rises after BoC announcement

NEW YORK, Oct 23 (Reuters) - The euro tumbled against the yen and hit a one-week low versus the dollar on Tuesday as concerns about a global economic slowdown and a spike in Spain's borrowing costs spurred broad-based risk aversion.

While the euro is up about 1 percent against the dollar in October, it has only closed above the key psychological level of $1.30 in seven sessions during the month. The euro's upside is widely seen as limited given the unresolved three-year-old debt crisis and mounting evidence that global growth is sputtering.

U.S. stocks traded sharply lower as poor earnings from major multinational U.S. companies confirmed fears about global growth. A top European share index slid to its lowest level in more than one and a half months.

The borrowing costs of Spain, which is under pressure to seek a sovereign bailout, rose after credit rating agency Moody's downgraded five Spanish regions.

Meanwhile, data showed business morale in France's manufacturing sector slumped to its lowest in over two years, fueling concerns about the euro zone's second-largest economy.

``The dollar will continue to take its cue over the near term from developments regarding Spain,'' said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington D.C.

``News of an official request for aid by Madrid is likely to send the dollar broadly lower,'' he said. ``However, despite the still anemic pace of recovery, growth in the U.S. appears to be in better shape than in much of the rest of the world's major economies.''

The euro fell as low as $1.2950, its lowest since Oct. 16. It last traded at $1.2964, down 0.7 percent on the day. The currency, however, remains within the $1.28 to $1.3170 range it has traded in since mid-September.

``Continued signs that America is outpacing its rivals in recovery should provide some increasing fundamental support for the dollar over the medium term,'' Esiner said.

The Federal Reserve commenced a two-day monetary policy meeting. While officials are not expected to make any policy changes, the statement on Wednesday could make an impact on market activity.

The euro has strengthened recently on speculation that Spain will request aid, enabling the European Central Bank to buy its bonds. The euro's gains, however, have been limited due to uncertainty over when Spain will act.

Looking ahead, initial readings of euro zone PMI data and a German Ifo business sentiment survey on Wednesday will be closely watched for signs of how the currency bloc is holding up.


The yen remained vulnerable on expectations that the Bank of Japan will ease monetary policy at its Oct. 30 meeting.

The yen earlier in the global session hit a three-month low against the dollar and a five-month trough versus the euro on expectations that the Bank of Japan will further loosen policy later this month.

The dollar, however, later erased gains and fell for the first day in nine sessions against the yen to last trade at 79.78 yen, down 0.2 percent on the day.

The Japanese currency recovered, coming off its lows after Finance Minister Koriki Jojima denied a report that the government is asking the central bank to raise asset purchases by 20 trillion yen ($251 billion) to boost economic growth.

Against the yen, the euro last traded at 103.54 yen , down 0.8 percent on the day.

``The market is a bit fixated on this meeting next Tuesday and no one wants to stand in front of a freight train,'' said Steven Saywell, head of FX strategy at BNP Paribas.

``There's potential for disappointment. We are looking for opportunities to sell rather than chase the dollar higher.''

Elsewhere, the U.S. dollar rose against the Canadian dollar even after the Bank of Canada announced it will likely have to raise interest rates over time.

``Despite some mild softening in its tone, the central bank has largely retained its tightening bias, in contrast to market expectations which generally expected a switch to a neutral stance,'' said Vassili Serebriakov, currency strategist at Wells Fargo in New York.

``Acknowledging that near-term Canadian dollar upside may be limited by overextended speculative positioning, we nevertheless see the Bank of Canada's relative hawkishness as a key driver of further Canadian dollar gains in the coming months and quarters,'' he said.

The U.S. dollar last traded 0.1 percent higher at C$0.9928 , according to Reuters data.