* Euro down as worries resurface about Ireland
* Peripheral yield spreads widen; weak German data weighs
* Friday's robust U.S. jobs numbers support dollar
(Updates prices, adds comment, detail, changes byline, dateline)
By Steven C. Johnson
NEW YORK, Nov 8 (Reuters) - The euro fell on Monday as investors fretted anew about budget problems in Ireland and some of the euro zone's other weaker links.
Last week's surprisingly strong U.S. jobs data also prompted investors to buy the dollar, which had slipped to a 9-1/2 month low against the euro after the Federal Reserve said it would buy $600 billion of Treasuries by mid-2011 to lower interest rates and reinvigorate a sluggish economy.
The euro was last down 0.7 percent at $1.3940, and traders said a break through support around $1.3860, its low so far this month, could trigger a near-term move toward $1.37. It also fell 0.8 percent to 113.13 yen.
"We're finally seeing the market turn its gaze away from Fed easing and toward these ongoing problems in peripheral Europe," said Matthew Strauss, senior strategist at RBC Capital Markets in Toronto.
"Even before the Fed meeting, spreads for Ireland, Greece, Portugal were widening, and now that the Fed has indicated what it will do, the market is starting to trade on these worries."
Current market anxiety was focused mainly on Ireland. Although the government is funded until early 2011, a local newspaper report questioned its ability to cut spending next year, casting doubt on future demand for government debt.
The cost of protecting Irish government debt against default rose on Monday, as did equivalent insurance for Spain.
China said over the weekend it would help Portugal, another euro zone country with strained public finances, cope with the crisis but made no promises about buying Portuguese government bonds. China has promised to buy Greek bonds in the future.
Weak German industrial output data also hurt the euro, while a general move away from risk weakened the Australian dollar, which fell 0.6 percent to $1.0097, off Friday's 28-year peak of $1.0183. The New Zealand dollar fell 1.2 percent to $0.7871.
The U.S. dollar was little changed at 81.15 yen.
DOLLAR PROBLEMS REMAIN, G20 AHEAD
The dollar still faces an uphill climb against most major currencies and will probably remain under pressure against emerging market ones despite Monday's gains, traders said.
While recent jobs data as well as reports on manufacturing and service sector growth were surprisingly strong, analysts said the economy has yet to show it can sustain such strength.
"We don't see a massive sell-off of the euro nor do we expect a mad sell-off of the dollar. The market is caught between the impact of the Fed's easing and euro-zone debt problems," said Daragh Maher, deputy head of FX research at Credit Agricole CIB.
That will put the focus on other currencies. Among the majors, Strauss said he likes the Canadian dollar, which has struggled in the run-up to Fed easing. But he said the currency stands to gain if the U.S. economy starts to gain traction and the Bank of Canada is able to raise rates again in 2011.
The U.S. dollar was last up 0.4 percent at 1.0045 Canadian dollars.
Analysts also said traders may be cautious about chasing the dollar much higher ahead of the Group of 20 nations summit meeting in Seoul later this week, which may address global economic imbalances.
The Fed's decision to pump more money into the U.S. economy irked developing and some developed countries who fear the money will stoke inflation outside U.S. borders, where returns on global investment are higher. Germany's finance minister called U.S. monetary policy "clueless."
But China appeared to temper its criticism over the weekend, saying the Fed's policy would help the world economy by boosting U.S. growth.