* Euro rises as Greece launches bond
* Euro supported by short-covering for now
* Dollar edges up vs yen; hawkish RBA comments lift Aussie
(Updates prices, adds U.S. data, comment, changes byline)
By Steven C. Johnson
NEW YORK, March 29 (Reuters) - The euro rose on Monday, boosted by last week's euro zone agreement on emergency financial aid for Greece, but retreated from a session high as markets awaited the outcome of the country's seven-year bond sale.
After hitting a 10-month low beneath $1.33 last week, the euro rose above $1.35 on Monday as Greece returned to capital markets for the first time since the euro zone agreed to a joint European Union-International Monetary Fund aid package should the Greek debt crisis worsen.
The bond was set to raise 5 billion euros, a source at one of the banks charged with selling the debt said, but could price at around 6 percent, more than twice the yield that Germany pays on its debt.
"People are waiting to see how this will work out," said Sebastien Galy, currency strategist at BNP Paribas in New York. "If it goes well, euro-dollar will shoot higher, with a move toward $1.36 fully achievable, but that's probably not sustainable and could be a good chance to sell the euro."
Galy and others said worries about Greece's ability to keep refinancing its debt at affordable levels and concern about other indebted euro zone countries would weigh on the euro.
The euro was last trading at $1.3450, up about 0.3 percent, after earlier rising as high as $1.3506, according to Reuters data. It was up 0.4 percent at 124.55 yen.
The dollar rose 0.1 percent to 92.52 yen but retreated from a session high around 92.78 yen on selling by Japanese exporters before Japan's fiscal-year ends on Wednesday.
Sterling rose half a percent to $1.4977 while the Australian dollar gained 1 percent on the day. The Aussie was helped by hawkish comments from Reserve Bank of Australia Governor Glenn Stevens.
Investors were a bit more optimistic about the U.S. economy, with payrolls data due later this week expected to show employers added 190,000 new jobs in March.
A government report on Monday shoed U.S. consumer spending rose as expected in February for a fifth straight month, though stagnant incomes pushed savings to their lowest level since October 2008.
Markets don't expect the Federal Reserve to raise interest rates until the second half of the year at the earliest, though most participants see rates in the United States rising faster than those in Europe or Japan.
SHORTS STRETCHED
The euro on Monday was hemmed by options set to expire later in the day. Around 150 million euros' worth of $1.3450 options and 300 million euros of $1.35 options tick over on Monday, according to IFR, a Thomson Reuters service.
Part of its rebound on Monday was also ascribed to an unwinding of record high short-euro positions seen when concerns about Greek fiscal problems drove the currency below $1.33.
But many analysts said ongoing fiscal issues facing Greece and other euro zone countries would keep the euro under selling pressure in the coming months.
"Greek yields are still elevated, and Greece is not out of the woods yet by any stretch of the imagination," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.