* Traders cite worries risk asset rally looking stretched
* Falls in Asian shares and oil prices also give yen a lift
* Eyes on impact of China's plan to curb redundant investment
* Sterling hits 6-week low against the yen
By Masayuki Kitano
TOKYO, Aug 27 (Reuters) - The yen rose broadly on Thursday as
investors fretted that a rally in risk assets since March may
have run ahead of a recovery in the global economy and on worries
about the outlook for Chinese shares.
Market players were keeping an eye on China stocks for
direction hints, with currency traders citing worries that
China's plans to curb industrial overcapacity may have a negative
impact on Chinese equities, at least in the short-term.
The broader concern, however, was that a rally in risk assets
such as equities and oil since March may have gone too far,
traders said.
Such doubts were lending support to the low-yielding yen,
which tends to rise against currencies such as the Australian
dollar when the global economic outlook worsens or investor risk
appetite declines.
"Markets seem to have already priced in various kinds of good
news," said Minoru Shioiri, chief manager of FX trading at
Mitsubishi UFJ Securities.
Although the global economy seems to have got past the worst
of its troubles, there are concerns about the outlook and how it
will fare once various types of economic stimulus wear off,
Shioiri said.
The Australian dollar fell 0.6 percent against the yen from
late U.S. trading on Wednesday to 77.39 yen <AUDJPY=R>, pulling
away from a 10-month high of 82.00 yen hit earlier in August.
The dollar dropped 0.7 percent to 93.64 yen <JPY=>, dipping
back towards a one-month low of 93.42 yen hit on trading platform
EBS last week.
The euro fell 0.5 percent against the yen to 133.70 yen
<EURJPY=R> and edged down 0.1 percent against the dollar to
$1.4242 <EUR=>.
Sterling slumped to a six-week low of 151.66 yen <GBPJPY=R>
amid the yen's broad rise. After trimming some losses, sterling
was down 0.7 percent on the day at 151.80 yen.
Chinese shares, which have fallen sharply over the past
several weeks, dipped 1.2 percent <>, while Tokyo's
benchmark stock index was down 1.7 percent <> on the day.
A dip in crude oil prices <CLc1> was another factor that held
back commodity-linked currencies such as the Australian dollar,
helping to push them lower against the yen, traders said.
Analysts have said China's equity market now seems to be
driven by technical factors, concerns over share supplies and
other domestic factors, rather than concerns about China's
economic recovery, which is seen as being on track.
But currency traders cited worries that China's plans to curb
industrial overcapacity could have a negative impact on Chinese
equities, at least in the short-term.
"As the economies of industrialised nations are struggling,
if China puts on the brakes, worries about the global economy
will likely increase. This could be a negative factor for shares,
which would lead to yen buying," said Ayako Sera, market
strategist at Sumitomo Trust & Banking.
China's cabinet said on Wednesday that it would take steps to
curb overcapacity and redundant investment in industries ranging
from steel to wind power equipment, the official Xinhua news
agency reported. []
The market is looking ahead to the second reading of U.S
gross domestic product for the second quarter due on Thursday.
Economists in a Reuters survey forecast a 1.5 percent contraction
rate compared with a 1.0 percent rate of contraction in the first
reading. []
The number of U.S. workers filing new claims for jobless
benefits for the week ended Aug. 22 will also be released later
in the day. []
(Additional reporting by Kaori Kaneko; Editing by Joseph
Radford)
