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* German, euro zone PMI data weaker, dims euro outlook * Moody's changes German rating outlook to negative * Troika visits Athens to relaunch economic plan * Spain bailout fears grow as yields stay elevated By Gertrude Chavez-Dreyfuss NEW YORK, July 24 (Reuters) - The euro fell to a more than two-year low against the dollar on Tuesday as weak euro zone data and a dimmer outlook for the region's strongest economies from Moody's further clouded the prospects for the common currency. Germany's purchasing managers index showed both the manufacturing and services sector shrinking more than expected in July. The equivalent French manufacturing survey was also well below forecasts. In the United States, manufacturing expanded at its slowest pace since late 2010, hobbled by weak overseas demand. The data came a day after Moody's revised its outlook for Germany, the Netherlands and Luxembourg to negative, warning that Europe's top-rated countries may have to increase support for indebted states such as Spain and Italy. "The continuing deluge of negative euro-related news has restrained the single currency's upside potential, leaving it vulnerable to further depreciation," Ravi Bharadwaj, pricing and market analyst at Western Union Business Solutions in Washington. It doesn't help, he added, that "euro zone public officials have persistently acted like deer in the headlights when facing the region's extraordinary credit strains." Tommy Molloy, chief dealer, at FX Solutions in Ridgewood, New Jersey, was more concerned about the negative outlook on the euro zone's stronger economies, which has dire implications. "It is underlining the fact that whatever resolution for Europe -- whether Greece exits or stays in the euro, giving up sovereignty, but facing the prospect of being eternally bailed out, will ultimately undermine the stronger members of the euro zone," Molloy said. Other analysts said worries that more Spanish regions will follow Valencia and request financial aid from Madrid would keep Spanish bond yields high and encourage investors to sell the euro. Spain was forced to pay higher yields on short-term debt at a sale on Tuesday while Spanish borrowing costs remained at levels which analysts say are unsustainable in the long term. In midday trading, the euro fell to $1.2057, its weakest level since June 2010. It was last at $1.2067, down 0.4 percent on the day. Traders said the euro's slide to two year lows midday was prompted by comments by Reuters sources that Greece could miss debt reduction targets outlined in the country's bailout deal. BNP Paribas said given steep declines in the euro versus the dollar, its indicators are flagging a "strong buy signal" on the pair, which has been deeply undervalued. Euro/dollar's fair value, based on BNP's estimates, is at $1.2420. The euro zone's common currency got only a brief lift earlier after data showed China's manufacturing output grew at its fastest pace in nine months, with the overall trend for the currency remaining negative and global growth worries still intact. Traders said the euro had support at an options barrier at $1.2050 and below that at the psychological level of $1.2000. Below there the next target would be the 2010 low at $1.1876. PMI data showed private sector activity in the euro zone as a whole shrank for a sixth successive month, which data collector Markit said was consistent with a quarterly GDP fall of 0.6 percent. U.S. manufacturing, meanwhile, expanded at its slowest pace since late 2010, hurt by weak overseas demand for American goods. EURO ZONE RATE OUTLOOK A rate cut or cash injection from the ECB could give investors even less incentive to hold the euro. Since the ECB cut interest rates earlier this month the euro has fallen heavily against a range of currencies, including those which usually fall in times of heightened risk aversion. It traded at A$1.1757 against the Australian dollar, near Monday's record low of A$1.1690, and at C$1.2316 versus the Canadian dollar, also near a record low. The euro fell 0.6 percent against the safe-haven yen to 94.45 yen, holding above Monday's low of 94.22 yen, its lowest in nearly 12 years. The near-term outlook for the euro and riskier currencies will also be influenced by the outcome of a visit to Athens by inspectors from the troika of international lenders whose bailout loans are keeping Greece from going bust. However, analysts said poor U.S. data may slow the euro's decline against the dollar even as it falls against other currencies. Figures on Friday are expected to show growth slowing in the world's largest economy. The dollar index, which measures its value against a basket of currencies was up 0.3 percent at 83.918, below Monday's two-year high of 83.999.