* Euro eases after two straight days of gains versus dollar
* China growth, other data in line with or above forecasts
* Dollar reaches best level in a month versus yen
By Anirban Nag
LONDON, Oct 18 (Reuters) - The euro eased from a one-month high on Thursday as some sovereign investors booked profits after two days of gains, though losses would be limited by soft Spanish bond yields and optimism about the global economy.
A jump in U.S. bond yields after strong housing numbers helped the dollar to a one-month high against the yen. The Japanese currency has been under pressure on expectations the Bank of Japan will announce fresh stimulus.
The euro was slightly lower on the day at $1.3095, having risen to $1.3140 on Wednesday -- its highest since mid-September. Bids from sovereign investors are reported at $1.3080 with technical resistance seen at its four-month high of $1.31729 and stop-loss buy orders cited above $1.3180.
Traders cited option expiries at $1.3100.
The euro rose to a one-month high of 103.850 yen, just below a four-month peak of 103.858 hit in September, though a failure to break above that level at its first attempt prompted some profit-taking.
"We are expecting some more upside in the euro as investors seem to get comfortable with the timeline about when Spain will seek a bailout and the ECB's bond buying will be triggered," Beat Siegenthaler, currency strategist at UBS.
"Spanish two-year bond yields are at levels seen in September while at the same time the global picture is also improving given the Chinese and the U.S. data."
A raft of data from China was either in line with or better than expectations, helping the euro and riskier assets. Growth in the third quarter was 7.4 percent from a year earlier, in line with a Reuters poll.
In the United States, groundbreaking on new homes surged in September to its fastest pace in more than four years, data showed on Wednesday.
Spanish 10-year bond yields were hovering near six-month lows struck a day before, auguring well for a sale of up to 4.5 billion euros of bonds later in the day.
Before a two-day summit of European Union leaders starting on Thursday, German Chancellor Angela Merkel continued to oppose a pan-European banking supervisor, dashing hopes of some euro bulls who were hoping for closer fiscal and banking integration. While expectations from the summit are low, it will still be watched for any major announcements on debt-laden Greece.
The euro's recent gains have seen demand to hedge against its weakness wane, with one-month risk reversals, a measure of the premium required to hold a put or a call in a currency, showing a very slight bias for more weakness.
One-month euro/dollar risk reversals in favour of euro puts, or options betting on its weakness, traded at 0.15 vols, their lowest in two years. It stood at 2.4 vols in May when talk of a Greek exit from the euro was at its height.
Due to the euro's recent advance, the dollar index was near Wednesday's one-month low of 78.935, trading at 79.14. A break of the Sept. 14 low of 78.601 would take the index back to lows not seen since February.
However, the dollar rose to a one-month high of 79.22 yen . Traders said a sharp rise in U.S. Treasury yields on the back of the housing data helped make the dollar more attractive.
Osamu Takashima, chief FX strategist at Citibank in Tokyo, said the yen's weakness was more to do with concerns that Japan's exports may suffer due to a sharp fall in sales in China after a territorial row between the two countries.
"The BOJ's easing has been viewed as a done deal and it's not clear whether its easing will have any impact. Rather I think the market is pricing in a possible fall in Japan's exports," he said.