* 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, adds detail)
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 and trimmed recent bets against the U.S. dollar.
Last week's surprisingly strong U.S. jobs data also prompted investors to buy the dollar. The greenback has 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 fell 0.9 percent to $1.3905, 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 1 percent to 112.88 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 0.4 percent to $1.0113, off Friday's 28-year peak of $1.0183. The New Zealand dollar fell 1.1 percent to $0.7881.
The U.S. dollar was off 0.1 percent at 81.17 yen.
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The dollar still faces an uphill climb against most major currencies and emerging market currencies, 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.
There's also the matter of the Fed's promised bond buying to the tune of about $75 billion per month, which will keep interest rates low and dull the dollar's global appeal.
"It's difficult to imagine a larger-than-expected easing operation being viewed as anything but dollar-negative," said BNY Mellon strategist Michael Woolfolk. "But the short dollar trade is overcrowded, so people may take some profits to set themselves up to take another swipe at the dollar later."
Commodity and Futures Trading Commission data last week showed speculators had increased dollar short positions in anticipation of more Fed easing.
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.
The issue will probably feature at a Group of 20 meeting in Seoul this week that may address global economic imbalances.
But if worries about euro zone debt issues mount, some said the dollar may rise as global investors exit riskier trades.
Woolfolk said it could be a repeat of events last November, when debt worries in Dubai and Greece sparked a safe-haven rush into dollars.
"Last year, people closed their books early, took profits, and bought dollars," he said. "This year, Ireland suggests there is still smoke emanating from the European sovereign debt crisis, and if it turns into a fire, it's quite possible that an overbought euro will suffer again."
(Editing by Andrew Hay)