* Euro flat at $1.4110
* IMF's Strauss-Kahn charged; adds to uncertainty on EU debt
* Asian sovereign demand helps euro pare losses
(Adds quote, detail)
By Naomi Tajitsu
LONDON, May 16 (Reuters) - The euro traded near a seven-week low against the dollar on Monday on doubts that a European finance ministers' meeting would offer more clarity on euro zone debt aid, but losses were limited with demand for the single currency seen around the psychologically key $1.40 level.
The euro
That view added to broad risk aversion, prompting short-covering demand for the dollar at the expense of higher-yielding currencies including the Australian, Canadian and New Zealand dollars.
Equity and commodity markets also took a hit, which analysts said was helping to support the dollar.
The IMF moved to fill a leadership vacuum by naming No 2 official John Lipsky as acting managing director.
Strauss-Kahn had been due to join euro zone finance ministers on Monday to discuss the bloc's debt crisis and how to handle Greece, which is struggling to meet the terms of a 110 billion euro European Union/IMF bailout granted last year.
"The peripheral euro zone problems continue to be somewhat of an albatross for the euro and they will keep the euro bulls at bay," said Paul Mackel, director of FX strategy at HSBC.
"These problems have been there all along but recently they've put more of a risk premium into the euro than was the case a few months ago."
Market players said the euro could stay under pressure as meaningful progress on resolving the Greek crisis was unlikely at Monday's meeting. Athens is struggling to put its public finances in order under an EU/IMF bailout programme.
Still, traders said the euro's fall met with strong demand from Asian sovereign accounts who were still keen to buy it on dips, while strong bids were seen towards $1.40. This helped it to bounce back to $1.4110, close to unchanged for the day.
The euro has fallen around 6 percent from a 17-month peak of $1.4940 hit less than two weeks ago as peripheral debt concerns resurfaced, but $1.40 appears to be an important support level.
It represents its 200-week moving average, while the 100-day moving average lies at $1.3922. Below that is the 50 percent retracement of the euro's January to May rally, near $1.3900.
EURO LONGS
U.S. data showed speculators still had hefty long euro positions even after trimming them and other higher-yielding currencies such as the Australian dollar last week, which suggests chances of more liquidation of euro long positions. [nN13251796]
Kiran Kowshik, a currency strategist at BNP Paribas, said the euro was vulnerable to more losses as investors continue to shake out hefty bets for a stronger euro.
"I wouldn't be surprised to see a break of $1.4050 or $1.40 if general risk reduction prompts more position adjustments in favour of the dollar," he said.
Kowshik added that an ongoing, downward correction in equities and commodities through June would also prompt more short covering in the dollar, which could knock euro "three or four big figures lower than that".
As the euro wobbled, the greenback's index against a basket of six major currencies hit a six-week high of 76.001 <.DXY>. It was last close to flat for the day at 75.809.
The euro was flat at 114.02 yen
A 0.7 percent fall in world stocks <.MIWD00000PUS> dented risk appetite, knocking the Australian dollar down 0.4 percent to $1.0532, while the U.S. dollar rose 0.9 percent against the Canadian dollar to C$0.9770. (Additional reporting by Neal Armstrong; Editing by Catherine Evans)