* Dollar slides vs yen, Swiss franc as risk appetite wanes
* Record high oil prices, falling stocks fan risk aversion
* U.S. core PCE better than expected, eases in May
(Updates prices, adds comment, U.S. data, changes dateline,
byline)
By Steven C. Johnson
NEW YORK, June 27 (Reuters) - The yen hit a three-week high
against the dollar on Friday and rebounded from a record low
against the euro as investors reduced risk exposure amid record
high oil prices, slumping stocks and fears about U.S. growth.
Antipathy to risk also lifted the safe-haven Swiss franc to
a three-week peak against the dollar. The franc also rose after
Russia's central bank said it plans to increase the currency's
share in its $558.7 billion gold and foreign exchange reserves.
For details, see [].
The oil price hit a record above $142 a barrel. So far this
year, it has gained more than 47 percent <CLc1>, heightening
global inflation concerns.
"Weakness in equity markets coupled with a continuation of
the theme of upside inflation and downside growth surprises has
seen risk aversion re-enter as a theme for foreign exchange
markets," said Divyang Shah, senior currency strategist at
Commonwealth Bank in London.
The dollar was down 0.4 percent at 106.35 yen <JPY=>, near
a session trough of 106.08. The euro also fell 0.5 percent to
167.40 yen <EURJPY=>, a stark reversal from the prior session's
surge to 169.45, an all-time high
The dollar hit its lowest against the Swiss franc since
June 9 at 1.0168 francs <CHF=> before rebounding to 1.0204
francs, still down 0.3 percent from late Thursday.
"There is a bout of risk reduction across assets," said
Martin McMahon, FX strategist at Credit Suisse in Zurich. "It's
probably got further to run, and being in the Swiss franc is a
good place to be, and in the yen to a certain extent as well."
The euro was little changed against the dollar at $1.5740
<EUR=>. The greenback drew little support from a report on
Friday showing underlying U.S. inflation pressures eased
slightly in May, further undermining the case for the Federal
Reserve to hike interest rates to offset the impact of high oil
prices.
The Fed left interest rates on hold at 2 percent on
Wednesday, and while it said inflation risks have increased, it
did nothing to convince markets of an imminent rate hike.
The European Central Bank, by contrast, has all but assured
markets that it will raise its refinancing rate from 4 to 4.25
percent next week, and that has helped the euro rise 0.7
percent against the dollar this week.
The euro showed little reaction to a report that euro zone
economic sentiment fell more than expected this month, and
analysts said it was not likely to deter the ECB from raising
rates.
Indeed, inflation remains a top concern across the
15-country euro zone. Spanish consumer price inflation hit a
record high of 5.1 percent in June, while inflation also rose
in five German states
EU Economic and Monetary Affairs Commissioner Joaquin
Almunia said on Friday that euro zone inflation will stay high
for longer than previously expected and that oil and food
prices may rise further.
(Additonal reporting by Toni Vorobyova in London; Editing by
Jonathan Oatis)
