* Euro retains selling bias on concerns over euro zone unity * Extreme positioning leads to volatile trade * Aussie dollar hit on risk aversion, position liquidation (Adds quotes, detail) By Neal Armstrong

LONDON, May 20 (Reuters) - The euro remained vulnerable in volatile trade on Thursday as uncertainty over unity in the euro zone weighed on the single currency, with extreme short positioning exacerbating moves.

Higher-yielding currencies such as the Australian dollar were under heavy selling pressure as the euro zone's troubles fuelled risk aversion, leading to liquidation of long positions.

At 0915 GMT, the euro EUR= was trading down 0.3 percent at $1.2390 in choppy trading after falling in Asia to $1.2323.

The euro rebounded on Wednesday from a four-year low of $1.2143, hit after Germany banned short-selling in some securities, as traders covered short positions on speculation European monetary officials might move to check its rapid fall.

A European Central Bank spokesman declined comment on the rumours and Eurogroup Chairman Jean-Claude Juncker said in Tokyo on Thursday he did not see a need for immediate action. [ID:nTOE64I038]

The bias for the euro is still lower but concerns over excessive short positioning mean the price action will be very volatile, said Geoffrey Yu, currency analyst at UBS.

The euro has failed to get above $1.2440 on three occasions this week, traders said

$1.2440 is a treble top and I'm hearing of decent names selling there. I think any type of rally you sell, a trader at a European bank said.

Increased uncertainty over euro zone market regulation weighed on the euro.

Germany's unilateral ban of naked short-selling in euro zone bonds and some bank shares caught its European partners unawares, suggesting the bloc was unable to form a united front in addressing its debt crisis.

A German parliamentary vote on a 750 billion euro aid deal to stabilise euro zone bond markets added to uncertainty.

The danger now is that the next point of focus becomes the German vote on its contribution to the shock and awe programme, most likely late on Friday night, Credit Agricole CIB analysts said in a note.

AUSTRALIAN DOLLAR

The Australian dollar came under further heavy selling pressure versus the U.S. dollar and the yen in particular.

The Aussie is risk-driven and markets are becoming increasingly risk-averse, said UBS's Yu.

The Aussie AUD=D4, traded down around 2 percent versus the U.S. dollar at $0.8320 after falling to an 8-month low of $0.8255 in early Europe. It was on track for its biggest weekly fall since the fallout from the Lehman crisis in 2008.

It fell more than 2 percent to trade below 76.00 yen AUDJPY= for the first time since July 2009. It hit a high of 81.83 on Monday.

A build-up of long positions combined with option-related structures have contributed to the Aussie's fall. Also equities and commodities have taken a hit, said Lauren Rosborough, senior currency analyst at Westpac.

The U.S. dollar slipped slightly versus a currency basket .DXY to trade at 86.267 after surging to a 14-month high of 87.458 on Wednesday on safe-haven demand.

The dollar was down around 0.3 percent JPY= at 91.25 yen. The low-yielding Japanese currency held decent gains against the euro, which slipped around 1 percent to 113 yen.

Germany