* Greek package triggers broad buying in euro
* Higher-yielding Aussie, kiwi also rally briefly
* Euro still faces hurdles medium term
(Releads, adds quotes, changes dateline prvs TOKYO)
By Natsuko Waki
LONDON, April 12 (Reuters) - The euro hit its highest in nearly a month against the dollar and rallied against the yen on Monday after euro zone finance ministers agreed a rescue package for Greece, triggering a short squeeze in the single currency.
Euro zone finance ministers approved a 30 billion euro ($40.5 billion) aid package of loans for Greece if needed, with at least 10 billion euros also expected from the International Monetary Fund, a move likely to calm markets in the short term.
The massive financial safety net for Greece boosted investor appetite for riskier assets, helping the Australian dollar to its highest in five months and the New Zealand dollar to its strongest since late January earlier in the day.
"The package is big enough and the term seems reasonable. For the market it means Greece will never have to panic sell and the market can't force Greece into a corner and that changes the complexion of Greek bets and the euro in the short term at least," said Daragh Maher, deputy head of global foreign exchange research at Calyon.
"It's generally positive for risk because you've taken out one of the big banana skins in terms of macroeconomic risk. (But) Greece still face difficulties and other euro zone countries face difficulties. It's hard to create a medium-term bullish story for the euro."
The euro rose as high as $1.3691, its highest since mid-March. It also rose more than 1 percent to 127.34 yen. A fall in the premium investors pay to hold 10-year benchmark Greek debt rather than German paper to 367 basis points from 409 bps on Friday also helped the euro.
Greece will test market appetite for its debt with an auction of 1.2 billion euros of Treasury bills on Tuesday.
Ratings agency Fitch lowered Greece's rating on Friday to BBB-, the lowest investment grade, saying a deepening recession and rising debt service costs would make it harder for Athens to meet its budget deficit reduction target.
The single currency is still down more than 4 percent against the dollar and yen since January, making it one of the biggest underperformers in major currencies this year.
"The way the market is short euro, this could give a leg up to around the next technical resistance at $1.3820," said Robert Rennie, chief currency strategist at Westpac in Sydney.
"But can it sustain a move higher than that? I am not sure. We may see some selling emerge around there."
HIGH-YIELDERS RALLY
The Australian dollar rose as high as $0.9382 before trimming gains to $0.9292 in Europe while the New Zealand dollar hit a peak of $0.7194.
The dollar fell 0.8 percent against a basket of major currencies as a week full of first-quarter earnings, from companies including Alcoa, JPMorgan, General Electric and Intel , kicked off.
The yen fell 0.3 percent to 93.42 per dollar with a possible revaluation in China's yuan currency in focus.
Chinese President Hu Jintao visits Washington this week for a nuclear security summit and is expected to hold a one-on-one meeting with U.S. President Barack Obama on Monday.