FOREX-Euro subdued, dollar near 8-½ mth high vs yen

* Euro weak below $1.32 as worries about Greece continue

* Dollar near 8-½ mth high vs yen on strong data

* Aussie firm ahead of RBA rate decision at 0430 GMT

By Anirban Nag

SYDNEY, May 4 (Reuters) - The euro huddled near one-year lows on Tuesday as concerns grew on whether a rescue package for debt-stricken Greece will work, while the Australian dollar held firm ahead of an expected rise in domestic interest rates.

The U.S. dollar hovered near 8-½ month highs against the yen, boosted by robust data that backed views that the Federal Reserve will be ahead of its counterparts in Europe and Japan in raising interest rates later this year.

In Asian trade, the euro was at $1.3190, a tad lower than $1.3195 in New York on Monday when it lost 0.7 percent.

Near term support is seen around its one-year low of $1.3112 and then at $1.3085, the 76.4 percent retracement of its rise from the March 2009 low of $1.2455 to a high of around $1.5140 in Nov, 2009.

Trade is expected to be light with Tokyo shut on Tuesday.

"The euro is heading towards lower lows," said John Horner, currency strategist at Deutsche Bank. "Its a combination of good U.S. data and a general feeling that the political process in the euro zone in trying to solve the Greek crisis is cumbersome that is hurting sentiment."

At the weekend, European finance ministers agreed to a record 110 billion ($147 billion) bailout package for Greece. But currency traders are worried whether Germany would secure parliamentary approval to release the money. Greece needs funds by May 19 to meet a big repayment to creditors.

For more, see [ID:nSGE64208W1] and [ID:nLDE6420B1].

Also, investors say there were concerns about other indebted euro zone countries such as Portugal and Spain.

The U.S. dollar hovered near an 8-1/2-month high against the yen, supported by strong U.S. manufacturing data which bolstered optimism about the economic recovery in the world's largest economy. [ID:nN03189741]

The dollar was at 94.72 yen, having risen to as far as 94.80 yen in its previous session, its highest level since Aug. 24. There was talk of stop loss orders at 94.80 and 95.00. The yen was also subdued on the crosses, losing ground against the euro and the Aussie .

Later Tuesday, the Reserve Bank of Australia (RBA) is expected to raise its 4.25 percent cash rate for the third straight time this year as the economy rebounds to near trend growth.

The Aussie was steady at $0.9260 , but with much of the hike now priced in a lot depends on the wording of the statement. If the RBA leaves the door open for more moves that coyuld support the Aussie.

But if it says rates are now at average levels that would be taken as a hint of a pause and could see the Aussie test $0.9220 and even $0.9135. (Editing by Wayne Cole)