FOREX-Euro gains but beset by persistent Greek worries

* Euro rises vs dollar on short-covering

* But Greek uncertainty caps gains, hits 10-yr low vs AUD

* German ZEW at 1000 GMT eyed

By Satomi Noguchi

TOKYO, Feb 16 (Reuters) - The euro rose against the dollar on Tuesday as expectations that European finance ministers would not say anything new on solving Greece's debt woes prompted short-term players to trim their short positions.

But many investors remained cautious about buying the single currency on uncertainty that debt problems in Greece will be resolved quickly.

The market was also waiting for the German ZEW institute's economic sentiment index at 1000 GMT, which is expected to fall to 42.0 from 47.2 previously.[DE/ECI]

"The market had sold the euro up to their chins before the meeting (of finance ministers), and some people are moving to trim those positions," said a senior trader for a Japanese bank.

"But the euro lacks its own buying factors. So this euro gain looks very fragile," he continued.

Eurogroup chief Jean-Claude Juncker said on Monday euro zone finance ministers had agreed Greece should propose new measures by March 16 to meet deficit targets and if Greece appears to be off course, additional measures will be requested. [ID:nLDE61E29L]

The euro fell to a decade low against the Australian dollar after the minutes from the Reserve Bank of Australia's latest meeting did little to alter expectations that the Australian central bank will gradually raise rates, marking a clear contrast to the euro zone economy which has been tainted by the debt problems in the region. [ID:nSYC002309]

Market players also found some comfort in buying up growth-linked or risky higher-yielding currencies such as the Australian and New Zealand dollars, while the Chinese market remained closed for holidays, reducing risk from market volatility.

Jonathan Cavenagh, currency strategist at Westpac, said that on Monday the EU's meeting did not seem to give a great deal of confidence to markets that the situation in Greece will move forward.

"The market is heavy on the euro and it is a sell on a multi-month basis," he said.

Traders said the market will be also watching further hurdles for Greece, which has two lots of more than 8 billion euros of government bonds to refinance in April and May.

The euro was trading around $1.3665, up 0.5 percent on the day, above Friday's nine-month low of $1.3532. The currency has shed nearly 10 percent since late 2009 as worries over whether Greece can service its debt mounted.

Also weighing on the euro were concerns Spain and Portugal could face similar debt problems and Europe's post-recession recovery could falter.

The latest data from the Commodity Futures Trading Commission shows currency speculators ran up a record short euro positions in the week to Feb. 9.

Against the Aussie, the euro fell as low as A$1.5229 , its lowest since September 2000.

The euro was higher on the yen at 122.70 yen from 122.29 yen late on Monday in London. U.S. markets were shut on Monday for a holiday.

The dollar index <.DXY> <=USD> was down 0.3 percent at 80.041, below a seven-month high of 80.748 hit late last week.

Against the yen, the dollar dipped 0.2 percent to 89.80 yen on broad selling of the greenback.

The RBA minutes showed the central bank decided to skip a rise in interest rates this month to better assess the impact of past hikes at home and the effect of sovereign debt stress abroad, though further gradual tightening is likely to keep inflation contained over time.

The Australian dollar climbed 0.9 percent to $0.8962, from $0.8885 late in London on Monday. (Additional reporting by Anirban Nag in Sydney, Kaori Kaneko in Tokyo; Editing by Joseph Radford)