* Euro slips, pauses from short-covering rally * Spain's CajaSur takeover keeps investors euro-negative * CFTC: IMM speculators trimmed record short euro positions (Adds comment, updates prices; changes dateline, previous LONDON and byline)
NEW YORK, May 24 (Reuters) - The euro fell broadly on Monday, pulling back from gains last week, after the Spanish central bank's takeover of a savings bank added to jitters about debt problems in some of the weak euro zone countries.
The Bank of Spain said on Saturday it had taken over the running of CajaSur following the failure of its planned merger with another regional lender. [ID:nLDE64L007] The move highlighted the weakness of the banking sectors of some euro zone members, already suffering from fiscal problems and struggling to bring down their budget deficits.
The news also wiped out last week's short-covering rally in the euro spurred by fears European monetary officials may intervene to prop up the beleaguered single currency.
We did have news about the Spanish bailout of a bank. But that's only part of the story, said Matthew Strauss, senior currency strategist, at RBC Capital Markets in Toronto.
What we saw last week was a short-squeeze rally on the euro and that was short-lived. Overall, the underlying theme is still one of risk aversion.
In early New York trading, the euro was down 1.6 percent on the day at $1.2369. It fell 1.3 percent versus the yen EURJPY=R.
Traders said euro losses accelerated after stop-loss orders were triggered under $1.2480. European banks and Asian central banks were also seen selling the euro in quiet trade, with many European markets on holiday.
Last week, the euro fell to a four-year low of $1.2143. Support is seen around $1.2135, the 50 percent retracement from the euro's all-time low to its all-time high.
Further adding to the stress was news on Monday that Spain's largest workers union was heading for a general strike in protest at the government's austerity measures, although it preferred not to call one. [ID:nMDT009049].
MORE EURO LOSSES
The euro has retreated from $1.2670 hit on Friday. It rallied last week as investors exited extreme short positions in the single currency, in part due to fears of intervention to prop up the euro after its dramatic decline in past weeks.
For an analysis of intervention prospects, see [ID:nLDE64K12A]
The euro's short squeeze isn't sustainable, said Chris Turner, head of currency strategy at ING. The market is waiting for the next negative news from the euro zone to sell the euro.
Commodities Futures Trading Commission data shows IMM speculators had by early last week cut back slightly on record bets the single European currency will weaken. [IMM/FRX] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For the chart on the latest data on euro positioning, click here ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Those positions have ballooned in past months, pushing the euro lower against the backdrop of Greece's debt crisis, which has threatened to spread to Spain and Portugal and raised concerns about the euro's stability.
Liquidity has dried up, leaving investors scrambling for safe-haven dollars. This helped to boost the dollar roughly 1.2 percent higher against a currency basket .DXY to 86.371 on Monday.
(Additional reporting by Naomi Tajitsu in London) (Editing by Theodore d'Afflisio)