* Risk sentiment, trade choppy after mixed global data
* European stocks rise but Wall Street slips
* Japanese election, soft data weigh on yen
(Updates prices, adds comment, changes byline)
By Steven C. Johnson
NEW YORK, Aug 28 (Reuters) - The dollar edged up against
the yen and euro in light trade on Friday as mixed economic
reports from around the world left traders guessing about how
the underlying health of the global economy.
Data showing Japanese deflation and unemployment at record
levels and a sharp slide in household spending kept the yen
under pressure two days ahead of Japan's general election.
European shares closed at a 10-month closing high <>,
while a rise in oil prices helped lift the Australian dollar to
a two-week high, as did expectations that Australian interest
rates will rise by year end.
But the euro struggled along with U.S. stocks, which dipped
after data showed U.S. consumer confidence fell to its lowest
level in four months, sewing doubt about a U.S. recovery.
"My biggest fear is that it doesn't matter how optimistic
consumers are if they don't have jobs or money to spend," said
Dan Cook, senior analyst at IG Markets in Chicago.
He said markets now realize that expectations for recovery
have outstripped supporting evidence and said he anticipates
the dollar "will come back strong as a safe-haven play."
"September's going to give us a smack down from this risk
play," he said. "We've run so far, so fast, it's not a matter
of if, it's a matter of when we see a good-sized correction."
The dollar rose 0.1 percent to 93.58 yen <JPY=> while the
euro was up 0.1 percent at 134.16 yen <EURJPY=>. It was down
about 0.1 percent at $1.4339 <EUR=>.
The dollar tends to rise along with risk aversion because
investors buy it as a safe haven or exit trades that had been
financed with cheap dollars.
The yen has acted in similar fashion, though on Friday,
investors said weak Japanese data and Sunday's election,
expected to produce a landslide opposition victory, was
weighing on the currency.
Sterling drew support from data that showed the UK economy
contracted at a slightly slower pace than previously thought
and was last up 0.2 percent a $1.6296 <GBP=>.
The Australian currency was up 0.2 percent at $0.8420 after
rising to a two-week high of US$0.8464 <AUD=>.
Relatively strong domestic economic data and hawkish
comments from central bank policymakers have prompted a shift
in market expectations of when the central bank will hike rates
to November from December.
Separate U.S. data showed consumer spending rose as
expected in July abut incomes remained flat.
Trading conditions remained light as they have all week,
with many desks thinly staffed for summer vacation, analysts
said. Many added that next week should provide a better gauge
of the economic situation, with a reports on U.S. manufacturing
and service sector activity and employment due.
Policy decisions from several central banks, including the
European Central Bank, are also on the calendar.
(Additional reporting by Gertrude Chavez-Dreyfuss in New
York and Jamie McGeever in London; Editing by Diane Craft)
