* Euro gains slightly after Greece approves budget law
* U.S. "fiscal cliff" continues to vex greenback
* Japan GDP report shows contraction in latest quarter
By Lisa Twaronite
TOKYO, Nov 12 The euro held above a two-month low in Asian trading on Monday after Greece's ruling coalition secured enough votes in parliament on Sunday to approve the 2013 budget law, but its potential for gains was thought to be limited by the impending meeting of euro zone finance ministers later in the session.
Deputies allied to Greece's three-party government approved the budget with a comfortable majority of parliament's 300 seats.
"Worries about Greece still remain, but at least some uncertainties have been removed, so we are unlikely to see a big euro selloff," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.
Euro zone finance ministers will meet in Brussels later on Monday to discuss whether to release a new tranche of funding to Greece. German Finance Minister Wolfgang Schaeuble told a German newspaper on Sunday that the troika of international lenders to Athens was unlikely to deliver its full report in time for Monday's meeting.
The euro zone likely will not release the new funding despite Greece's tough 2013 budget as there is no agreement yet on how to make its debt sustainable, though Athens is set to get two more years to cut debt, officials said.
The euro could come under pressure as investors hedged some of the risks associated with the Nov. 16 Greece funding deadline, said Richard Hastings, macro strategist at Global Hunter Securities, in emailed comments.
Greece will roll over 5 billion euros in treasury bills that mature on Nov. 16 because of a likely delay in getting the next tranche of its international bailout, a Greek finance ministry official said on Friday.
"But we should emphasize that when it comes to distressed finance, deadlines are not as hard as they seem, and deals are surprisingly spontaneous at any moment," added Global Hunter's Hastings.
The euro was changing hands at $1.2725, down from an earlier Monday high of $1.2737 but still up about 0.1 percent from late North American levels on Friday, when it fell as low as $1.2690 on the EBS trading platform. That was its lowest since Sept. 7. Support was cited at the euro's ichimoku cloud base at $1.2653 and at its 100-day moving average at $1.2639.
Against the yen, the euro last stood at 101.14 yen , down from a session high of 101.25 yen but still up about 0.1 percent and moving away from a one-month low of 100.43 yen hit on Friday.
The dollar bought 79.48 yen, down slightly from late North American levels on Friday, when it fell as low as 79.07 yen, its weakest since Oct. 18.
Markets shrugged off news early in the session that Japan's gross domestic product contracted 0.9 percent in July-September from the previous quarter, in line with forecasts. This was the first negative reading in three quarters, but it adds to fears that slowing global growth is pushing the economy into recession.
Concerns about the U.S. fiscal cliff weighed on sentiment toward the dollar, though some strategists said the greenback might benefit from a drop in risk appetite as investors fretted about the possible impact of about $600 billion in expiring tax cuts and spending reductions due to take effect in January.
U.S. President Barack Obama said on Friday he was prepared to compromise with Republicans to avert the fiscal cliff, but he insisted any plan include higher taxes for high earners. ID:nL1E8M93SW]
Currency speculators favored the U.S. dollar in the latest week for the first time since early September, according to data from the Commodity Futures Trading Commission released on Friday.
The dollar's net long position totaled $1.296 billion in the week ended Nov. 6, from net shorts of around $710 million the previous week. It was the first net long position for the greenback in two months.
The Australian dollar was up about 0.3 percent at 1.0413 , but still well shy of Wednesday's 1 1/2-month high of $1.0480.
The Aussie was underpinned by weekend trade data from China, a key trading partner, showing its trade surplus ballooned to its biggest in 45 months in October as export growth jumped to a better-than-expected five-month high.
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