FOREX-Euro off lows as investors eye Ireland's debt rescue

* Above-forecast German ZEW sentiment survey lifts euro

* Euro vulnerable as euro zone finance ministers meet

* Aussie dollar falls on fears of China tightening (Updates prices, adds comment, changes byline, dateline, previous LONDON)

By Wanfeng Zhou

NEW YORK, Nov 16 (Reuters) - The euro came off a near seven-week low against the dollar on Tuesday after stronger-than-expected German economic data and as investors waited to see whether euro zone ministers could agree on a solution to Ireland's debt crisis.

The euro stabilized around $1.36 after finding support at its overnight low at $1.3560. The single currency may see a reprieve if the finance ministers meeting in Brussels reach a deal, which would ease concern that Irish debt woes could spread to other economies such as Portugal and Spain.

Also, the euro gained after a survey by think tank ZEW showed German analyst and investor sentiment rose more than expected in November. For details, see [ID:nDEP003399]

But any rebound for the euro, which has sold off in recent days on anxiety over Irish finances, will likely be limited with investors mindful of the severity of the debt problems facing the euro zone's peripheral economies.

"For the short term, the developments in Europe, specifically regarding bailout or no bailout of Ireland, is dominating headlines," said Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto.

The euro was last 0.1 percent higher at $1.3596, off a session low of $1.3560 set on trading platform EBS, its weakest since late September. That took it below its 55-day moving average, now at $1.3567.

Ireland has so far insisted that its banks may need help but the state does not. [ID:nLDE6AE2AI]

"The worst case scenario is contagion risk and it might give the euro a short-term boost if Ireland were to accept some kind of bailout, although we would still be looking at a downside bias for euro/dollar," said Jeremy Stretch, head of currency strategy at CIBC.

Downside targets include $1.3463, a 50 percent retracement of the euro's September-November rally, and $1.3364, a 38.2 percent retracement of its June-November rally.

Comments from New York Fed President William Dudley, who said conditions for an exit from U.S. monetary easing could be "years away", also weighed on the dollar versus the euro. For details, see [ID:nN15280144] [ID:nN15286188]

DOLLAR HITS 6-WEEK HIGH VS YEN

Positioning data showed speculators cut short dollar positions and long euro positions significantly in the latest week [IMM/FX].

Traders said leveraged funds had flipped long euro/dollar positions, suggesting year-end position adjustment may favour the dollar.

"Any bounce in euro/dollar will be seen as a selling opportunity in the current environment," said Niels Christensen, currency strategist at Nordea in Copenhagen.

EU safety net description [ID:nLDE65718H]

More on how Ireland might tap funds [ID:nLDE6AE1S3]

Graphics: Debt distribution

http://link.reuters.com/rak65q

Bank exposure to Irish debt http://r.reuters.com/fez84q

Euro zone struggles with debt http://r.reuters.com/hyb65p

Ireland's bailout challenge http://r.reuters.com/wuv48p

The dollar index, which measures the dollar against a basket of currencies, gained 0.2 percent to 78.664 <.DXY>, off an earlier high of 78.761, its strongest since Oct. 1.

The dollar hit a six-week high of 83.34 yen as the gap between U.S. and Japanese bond yields moved further in the dollar's favor. It broke through resistance on daily Ichimoku charts at 83.17 yen, the bottom of the cloud. The top of the cloud was at 84.13 yen.

In other trading, the Australian dollar fell to its lowest in over two weeks at $0.9784 amid fears the China will tighten monetary policy. That has led investors to cut bets on high-yielding currencies like the Australian dollar, which is a large exporter of commodities to China. (Additional reporting by Jessica Mortimer in London; Editing by Chizu Nomiyama)