FOREX-Euro gains almost 2 pct on Greece rescue news

* Euro picks up as Germany, IMF approve Greek rescue package

* IMF says first aid available this week

* IMF says not talking to Spain or Portugal

* EU looking to put in place mechanism to contain contagion

WELLINGTON, May 10 (Reuters) - The euro extended its recovery from 14-month lows on Monday after financial aid for Greece was approved by German lawmakers and the International Monetary Fund, which also said it was not talking to Spain or Portugal.

The euro gained almost 2 percent against the dollar and 3 percent on the yen, while high yield currencies such as the Australian and New Zealand dollars also firmed as investors showed more appetite for risk.

In volatile early Asia-Pacific trade the euro was around $1.2940, up 1.8 percent from $1.2714 late in New York on Friday.

The improved sentiment followed news that the International Monetary Fund had approved a 30 billion euro package of aid for Greece, with the first payment available as soon as the middle of this week. See [ID:nN09175190]

There were also reports EU ministers were putting together a 600 billion euro stabilisation mechanism for the region including 440 billion of loan guarantees [ID:nBFA001193].

"The initial reaction has been positive, the initial details have been encouraging, but market's sentiment still a bit fragile as we're waiting for a some more detail," said Bank of NZ currency strategist Mike Jones.

"I think euro will consolidate until we get some further details, people are a bit wary they might be disappointed as in the past."

Jones said the euro would likely trade $1.2850-1.2950 range ahead of further news.

Euro/yen moved to 119.4 yen from Friday's late level of 116.07. Aussie/yen was 83.1 yen, up 2.2 percent, while it held a modest gain against the dollar to $0.8895 after spiking to $0.8939.

The dollar was firmer on the yen at 92.35 , from 91.56 yen at the end of last week.

The International Monetary Fund had approved a 30 billion euro ($40 billion) rescue loan for debt-stricken Greece, with 5.5 billion euros being disbursed immediately to stem a crisis that has begun to threaten other euro zone members. See [ID:nN09175190].

European finance ministers were also looking for special measures to stop Greece's debt crisis from spreading, promising to do everything they could to defend the euro from the "wolfpack" of financial markets. [ID:nLDE64803B]

The European Commission was expected to propose to ministers a mechanism intended to provide a multibillion-euro safety net for other euro zone countries.

The fears of a meltdown in the euro zone had been driving investors to the safety of the Japanese yen and the U.S. dollar, considered safe-haven investments when risk aversion spikes.

(Reporting by Gyles Beckford;)