The euro struggled to hold on to gains on Monday as investors sold into its latest bounce, while Asia stocks fell to hover just above eight-month lows hit on Friday on fears the euro-area debt crisis will hit world growth.

Although Wall Street was firm on Friday, investors in Asia weren't so bullish.

They sold exporters in Japan to pull the benchmark Nikkei average <.N225> down to its lowest level in more than five months, taking the view that a strong yen was undermining their earnings prospects. That added to the average's 6.5 percent fall last week, its worst weekly drop in over a year.

The euro fell to $1.2490 in Asian trade from around $1.2570 in late New York dealings on Friday.

The currency had posted its first weekly gain against the dollar in six weeks last week as investors bought back the currency following its long slide.

Dealers said the health of the European banking sector weighed on the euro, already hurt by worries about the impact of deep public spending cuts in Greece, Spain and Portugal.

At the weekend, the Bank of Spain said it was taking over the running of Spanish savings bank CajaSur after its planned merger with another of the country's small lenders failed.

The Australian dollar eased as carry trades funded in the single currency continued to be unwound on fears of a global slowdown.

The euro is still vulnerable structurally as the short covering that we saw last week seems to have run its course, said Tony Morriss, senior currency strategist at ANZ Bank.

Also, the unwinding of carry trades that lifted the euro against the Aussie last week could run into some resistance.

* The MSCI index of Asia-Pacific shares outside of Japan <.MIAPJ0000PUS> inched down 0.2 percent, hovering just above an eight-month low hit on Friday.

* Japan's Nikkei average <.N225> fell 0.5 percent, after earlier falling as much as 0.93 percent to 9,693.07, its lowest since early December.

* The euro rebounded sharply against the high-yielding Aussie last week, hitting three-month highs of A$1.5456, on the back of a huge sell-off by hedge funds. On Monday, the pair was trading at A$1.5188, just above late levels in New York on Friday.

* The Australian dollar fell 1.2 percent against the yen to 74.08 yen.

* The Aussie dollar extended its broad slide after global miner Rio Tinto said it is reviewing all capital spending plans in light of the Australian government's proposed resource super profits tax.

* Australian stocks rose, buoyed by bargain hunters picking up banks and miners, following a slight recovery on Wall Street. The benchmark S&P/ASX 200 index <.AXJO> gained 0.5 percent to 4,328.3, moving away from 10-month lows on Friday.

* Three-month copper on the London Metal Exchange inched up $5 to $6,850, extending gains of more than 3.5 percent from the previous session.

* U.S. crude futures was steady to trade around $70.00 a barrel. An oil price of $65 per barrel is still reasonable for all producers, but a price below that will be a disadvantage, the chief executive of Saudi Basic Industries Corporation <2010.SE> (SABIC) said on Sunday.

* U.S. benchmark 10-year Treasury notes edged up about 5/32 in price to yield 3.218 percent, down about 3 basis points from late U.S. trading on Friday.

(Additional reporting by Anirban Nag in Sydney; Editing by Neil Fullick)

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