* Yen, dollar gain; Aussie and sterling slide
* Global economy concerns curb risk demand
* July 8-10 G8 meeting eyed for FX diversification debate
(Adds comments, updates prices; changes dateline, previous
LONDON and byline)
By Nick Olivari
NEW YORK, July 6 (Reuters) - The yen and the U.S. dollar
gained broadly on Monday on eroding optimism about an
improvement in the global economy, dragging equities lower and
prompting investors to shun risk and buy currencies perceived
to be safe.
Currencies including the Australian dollar and sterling,
which have tended to benefit the most from any signs the global
economy is on the mend, fell sharply as the fallout from grim
U.S. jobs data last week continued.
Analysts said traders were coming to terms with signs
recent economic data have not been consistently better than
expected as in past months, and that it was possible for future
readings to show weakness.
"People are re-assessing their views of the economy here
and abroad," said John McCarthy, director of foreign exchange
at ING Capital Markets in New York. "Risk aversion is the
driving force."
In early New York trade, the dollar index, which tracks its
performance against a basket of six major currencies, was up
0.4 percent on the day at 80.749 <.DXY>. A fall in European
shares helped boost the U.S. currency.
The euro fell 0.4 percent to $1.3906, its lowest in nearly
two weeks. Also prompting euro weakness was a survey showing an
unexpected worsening in euro zone Sentix index, which tracks
investor and analyst sentiment. [].
The yen was the biggest beneficiary of risk aversion,
pushing the dollar <JPY=EBS> down 0.8 percent to 95.31 yen on
electronic trading platform EBS.
The Japanese currency also rallied on the crosses, pushing
the euro down 1.2 percent to 132.50 yen <EURJPY=EBS>, its
weakest in nearly two weeks, while sterling <GBPJPY=EBS> fell
roughly 1.6 percent to 154.07 yen, its weakest since late May.
Sterling, which is often seen as higher risk, fell 1.1
percent to a one-month low versus the dollar of $1.6153
<GBP=D4>, according to Reuters data.
The Australian dollar lost 0.9 percent to $0.7901 <AUD=D4>.
G8 SUMMIT IN FOCUS
Traders awaited a Group of Eight summit on July 8-10,
watching for the possibility of a debate on an alternative to
the dollar as a world reserve currency.
This week also sees central bank policy decisions in
Australia and the UK, while in the United States, the earnings
season for the second quarter gets underway.
Though any diversification of central bank reserves away
from the dollar would take several years to materialize,
investors are jittery about what comments may be made at this
week's G8 meeting, particularly by China.
Analysts said they did not expect serious concerns to be
raised about the issue this week, but some said the dollar's
short-term vulnerability to comments about reserves suggested
improving global fundamentals in the future may open the door
to dollar weakness.
"While it may be too early to sell USD, the fact that the
discussion has become so public suggests that USD weakness
would accompany a global recovery as confidence is restored in
the medium and long term," Barclays analysts said in a note.
The dollar received some support by reassurances from
China, which said at the weekend that the U.S. currency would
remain dominant for "many years to come". []
In comments published on Monday, however, Chinese officials
said the financial crisis had laid bare defects in the
dollar-led global economy and the world should look to displace
the U.S. currency, even if it takes many years. []
(Additional reporting by Naomi Tajitsu in London, Editing by
Chizu Nomiyama)
