* Euro plunges as S&P cuts Greece, Portugal credit ratings
* Market awaits details on Greek aid
* Yen gains broadly on risk aversion (Adds detail, quote, updates prices)
NEW YORK, April 27 (Reuters) - The euro suffered its biggest one-day percentage drop against the dollar in a year on Tuesday after a downgrade of Greece and Portugal's credit ratings raised fears the euro zone's debt problems were spreading.
Worries about the details on aid for Greece added to the deeply negative sentiment on the euro, which was down broadly against major currencies.
Standard & Poor's downgraded Greece's ratings into junk territory on doubts about its ability to implement reforms needed to address its high debt burden. For details, see [ID:nWNA9645] [ID:nLDE63P0LU]
The agency earlier on Tuesday downgraded Portugal's ratings, citing concerns about its ability to deal with high debt levels given its weak economic outlook. [ID:nWNA9638]
"There is such a fear of contagion in the euro zone between the downgrades of Portugal and Greece," said Carol Hurley, senior market strategist at Lind-Waldock in Chicago. "There is a lack of resolution on Greece and how aid will go to Greece and how it will affect other countries."
The heightened risk aversion boosted the dollar and the yen as investors worried that political pressures could stall the financial aid Athens is seeking from the European Union and International Monetary Fund to help pay its debts. [ID:nLDE63P0LU]
Risks that the Greek debt crisis will extend to other highly indebted states such as Spain also drew investors' focus.
THE GORILLA IN THE ROOM
The spread between Greek and German government bond yields swelled to its widest in 12 years as investors demanded higher premiums to hold Greek debt. The yields on short-term German government bonds fell to a euro-lifetime low <EU2YT=RR>.
The euro slid to a one-year low against the dollar, while also registering its biggest one-day percentage fall versus the dollar in 12 months at current prices.
In late afternoon trading in New York, the euro was 1.6 percent lower at $1.3173 <EUR=> according to Reuters data. The single currency traded as low as $1.3167 on Reuters data and $1.3166 on electronic trading platform EBS <EUR=EBS>.
Against a non-traded currency basket used as a measure of the dollar's broad performance <.DXY>, the dollar rose 1 percent to 82.319, but the dollar slipped 0.8 percent to 93.20 yen <JPY=> after hitting a session low of 92.82 yen.
The cost of insuring Greek debt hit a record high as did that of Portugal, reflecting wider euro zone credit risk which some analysts said could potentially create cracks in the euro system.
"Markets are really concerned about sovereign debt issues in Europe," said Brian Dolan, chief currency strategist at Forex.com, in Bedminster, New Jersey, adding that spreads on Greek credit default swaps "are hitting Argentine levels today."
German Chancellor Angela Merkel's party said on Tuesday it would bring up the subject of haircuts on Greek debt with the European Central Bank and the IMF on Wednesday. Berlin also has demanded Athens take painful austerity measures in return for aid. [ID:nLDE63P0LU] [ID:nLDE63Q18W]
Greece formally asked for aid on Friday and talks between the government, the European Union and International Monetary Fund were under way in Athens.
Athens needs to secure funding before a May 19 debt rollover deadline.
"There's just a feeling that even with all these downgrades, we're still playing catch-up and there's still more to bad news to come," said Win Thin, a currency strategist at Brown Brothers Harriman in New York. "People know Greece and Portugal are issues, but the gorilla in the room is still Spain."
Against the yen, the single European currency fell to as low as 122.57 yen <EURJPY=> down more than 2.5 percent on the day. General risk aversion often benefits the low-yielding Japanese currency. (Reporting by Nick Olivari and Vivianne Rodrigues; Additional reporting by Steven C. Johnson in New York; Editing by Leslie Adler)