* Euro gains 0.7 pct vs dollar, recovers from 10-mth low
* Euro zone leaders agree Greece safety net, includes IMF
* Uncertainties remain; euro dn 12 pct vs dlr since Dec
By Jessica Mortimer
LONDON, March 26 (Reuters) - The euro rose from a 10-month low against the dollar on Friday after euro zone leaders agreed on a safety net for Greece, though uncertainties remained over how Athens' debt burden would be managed in practice.
Euro zone leaders agreed a package under which Athens would receive both bilateral loans from euro zone partners and International Monetary Fund funding if it faced severe difficulties. [ID:nLDE62N2R1]
Traders said investors were encouraged after European Central Bank President Jean-Claude Trichet said the aid mechanism was "workable" and that IMF involvement would not infringe the independence of the ECB. [ID:nLDE62O2MJ]
"It's a positive that there are now more details on how the financing for Greece will be achieved," said Johan Javeus, currency strategist at SEB in Stockholm.
"The fact that there will be a mechanism in place reduces the risk of the euro zone breaking up. But going forward the market will be focusing more on whether Greece will be able to deliver the austerity measures it has promised".
At 0853 GMT, the euro <EUR=> rose 0.7 percent against the dollar to $1.3380, recovering after hitting its weakest level since early May at $1.3267 on trading platform EBS.
Concerns about Greece's fiscal health have caused the single currency to lose around 12 percent of its value versus the dollar since early December, when it was trading above $1.51.
Athens is saddled with borrowing costs more than double those of Germany and must borrow some 16 billion euros ($21.3 billion) between April 20 and May 23 alone to refinance maturing debt.
Technical analysts say the euro's fall below the psychologically important $1.35 level and then below the previous 2010 low around $1.3432 potentially pave the way for a move towards $1.30 or lower.
Against the yen, the euro rose <EURJPY=R> 0.7 percent to 123.86 yen, while it gained 0.6 percent against sterling <EURGBP=D4> to 90.15 pence.
DOUBTS ON GREECE DEAL
Uncertainties about how Greece will emerge from this crisis remained, while there are also concerns about other heavily-indebted euro zone nations.
"The market has known that there would be some kind of a rescue for Greece eventually. But the euro zone leaders' agreement still lacks details and the market is unconvinced Greece can manage its fiscal reconstruction," said Daisuke Karakama, a market economist at Mizuho Corporate Bank in Tokyo.
Others said the IMF's involvement could speed up the country's fiscal reconstruction, although some said there was a risk that extremely strict conditions would harm the Greek economy.
The dollar index <.DXY>, a measure of its performance against six other major currencies, fell 0.5 percent to 81.737, still close to a 10-month high of 82.877 after gaining sharply in the past few days on higher U.S. yields.
It struck its highest level since early January against the yen on Thursday at 92.96 yen <JPY=>, but trickled back on Friday to trade at 92.55.
"Exporters are ready to sell anywhere around these levels on dollar/yen, though selling shouldn't be as big as yesterday," a Tokyo-based trader said.
He said the next target for the dollar was about January's high of 93.78 yen, although with exporters ready to sell, reaching there could take some time.
(Additional reporting by Kaori Kaneko; editing by John Stonestreet)