LONDON, May 18 (Reuters) - The euro hit a four-month low against the dollar and 3-1/2 month trough versus the yen on Friday as concerns about a chaotic Greek exit from the euro zone and instability in the Spanish banking system fuelled demand for safer currencies.

Investors were reluctant to buy riskier assets after Moody's cut the credit ratings of 16 Spanish banks on Thursday. Fellow ratings agency Fitch downgraded Greece deeper into junk territory.

The euro tumbled to $1.2642, within sight its 2012 low of $1.2624. It has shed 4.1 percent against the dollar so far in May, while demand for the highly liquid dollar pushed it up 0.3 percent against a basket of currency on the day to a four-month peak of 81.758.