* China committed to buying Spanish debt, boosts euro
* Yen, Swiss franc big gainers as well in risk-off market
* Japan nuclear situation deteriorates
(Recasts, adds quote, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, April 12 (Reuters) - The yen and Swiss franc gained on Tuesday as Japan's nuclear situation worsened and commodities sold off, prompting investors to unload risky assets funded by the two low-yielding currencies.
The strength in both the yen and Swiss franc was likely to be short-lived. Demand for so-called carry trades financed by those two units was expected to pick up again once investors cash in on gains on these trades.
The initial sell-off in risk was prompted by Japan's Nuclear Safety Agency raising the severity rating of the Fukushima accident to level 7 -- the highest classification and the same as the world's worst nuclear disaster at Chernobyl in 1986..
Oil prices dropped sharply for a second day, dragging commodities and stocks lower, after Goldman Sachs called for a fall of almost $20 in the price of Brent crude oil in the next months.
"Growth in carry trades are owned heavily and looked overextended, especially the yen crosses. These are the ones looking shaky," said Tom Fitzpatrick, chief technical strategist at CitiFX in New York.
The sell-off in commodities also had a negative impact on risk sentiment in the currency market, other analysts said. The Reuters-Jefferies CRB index, a global commodities benchmark, fell about 1.9 percent on Tuesday in its sharpest one-day decline in a month as raw materials markets came under pressure from a sell-off in oil.
The euro was another big mover, rising to a fresh 15-month high against the dollar above $1.45, boosted by reported buying from China and news the world's second largest economy was willing to purchase more Spanish debt.
The euro's break above $1.45 was a bullish signal, which could open a test of $1.4550 and $1.4580. Both levels are said to be lined with option barriers.
In midday trading, the euro has come off its peaks, trading 0.2 percent on the day at $1.4455. Earlier, it surged to $1.4518, the euro's highest since mid-January 2010, according to electronic trading platform EBS.
Investors took out option barriers at $1.4500 and stops at $1.4510-12.
The China news also helped drive Spanish yields. Spanish 10-year yields have fallen to 5.18 percent on Tuesday from a recent high of 5.55 percent on March 10.
Citi's Fitzpatrick thinks the euro could pull back a little bit from $1.45.
"We have come a long way for a very short period of time. Maybe at this stage, we have gotten a little bit overextended and we could go back to $1.40, but probably not much lower," Fitzpatrick said.
But he added that the overall positive bias on the euro remained intact, and Citi's forecast is for the single euro zone currency to rise above $1.50 and settle at around $1.4850 by year-end.
The yen, meanwhile, rose for a fourth straight session against the dollar, partly retracing 10 consecutive days of losses. The Swiss franc also advanced for a fourth straight day versus the greenback.
The Japan radiation news led some speculators to book profits on carry trades, where investments in riskier assets and higher-yielding currencies such as the Australian dollar are funded by going short on the low-yielding yen.
Against the yen, the euro was down 0.9 percent at 121.15, recovering from a low of 120.16 yen hit earlier in the day. The Australian dollar also pared losses against the yen as did other growth-linked currencies as investors bought at lower levels.
Short yen positions and key technical indicators in the euro/yen and Aussie/yen pairs had been indicating the chances of a temporary pullback after their recent rally. With this correction, some analysts said, the trend for broad yen weakness was likely to be on more solid ground.
The U.S. dollar was down 0.9 percent at 83.79 yen , near technical support at its 200-day moving average just below 83.50.
Short-term losses in the dollar versus the yen are still likely, with a close below 84.41-51 yen adding to the greenback's bearish bias.
The dollar fell 0.9 percent against the Swiss franc to 0.89830. It earlier dropped to 0.89446, its lowest in more than three weeks. (Editing by Andrew Hay)