* Yen hits 3-wk high vs dollar, 1-mth peak vs euro
* Aussie dips to 1-mth lows vs dollar and yen
* Nikkei slides 3%, oil prices still on the defensive
By Satomi Noguchi
TOKYO, June 23 (Reuters) - The yen rose broadly on Tuesday
to hit one-month peaks against the euro and Australian dollar as
investors kept cutting bets on riskier assets amid growing
doubts about the sustainability of a nascent economic recovery.
Regional stock markets dropped with Tokyo's Nikkei share
average sliding 3 percent to track a broad sell-off in U.S.
stocks, as investor risk appetite faded after a gloomy World
Bank report. [] []
Commodity-linked currencies such as the Aussie fell against
the dollar and the yen as oil prices remained on the defensive
in Asian trade after a near 4 percent drop the previous day to
below $67 a barrel. []
Currency analysts at Barclays Capital said they thought the
drop in oil prices which came amid speculation of a fall in
China imports, was the main factor behind the sell-off in
equities and pointed to downside risks for metals and farm
goods' prices.
"Commodity currencies were unsurprisingly the biggest losers
overnight and given the run-up in some of these currencies over
the past few months, it seems likely that position liquidation
will keep them under pressure," the Barclays analysts said in a
note to clients.
Traders also reduced short positions in the greenback ahead
of a two-day Federal Reserve policy meeting this week and a
record sale of U.S. Treasury two-year notes later on Tuesday
which could add to market volatility.
"The market looks to be in a corrective phase before the
half-year end, meaning the dollar and the yen are likely to be
supported," said Kosuke Hanao, head of treasury product sales at
HSBC in Tokyo.
The euro fell as low as 131.60 yen <EURJPY=> on trading
platform EBS, its lowest since late May, although it edged back
to 132.13 yen, down 0.6 percent from late New York trade. It has
risen about 18 percent versus the yen since mid-January.
The euro dropped 0.1 percent to $1.3857 <EUR=>, but kept
well above this month's low of $1.3748.
The dollar fell as low as 95.11 yen <JPY=> on EBS, a
three-week low, but edged back to 95.33 yen, down 0.6 percent.
Traders said dollar/yen may be set to fall further after a
break below 95.50 yen as charts suggests the next key point
would be around 94.28 yen, a 50 percent retracement of its run
up to April's high of 101.45 yen from January's low of 87.10
yen.
The Australian dollar dropped to one-month lows against the
dollar and the yen, hurt partly by a 5 percent drop in copper
futures which added to a 2.7 percent decline in the
Reuters-Jefferies CRB index <.CRB> the previous day.
Lower commodity prices are bad news for the Aussie because
Australia is a leading seller of commodities such as iron ore,
coal and wheat.
The Aussie fell as low as $0.7810, its lowest since late
May, before trading at $0.7839 <AUD=D4>, down 0.3 percent on the
day. It slid to 74.36 yen before rebounding to 74.64 yen
<AUDJPY=R>, still down 1.1 percent.
But it has gained 24 percent against the U.S. dollar and 33
percent against the yen since its rally began in the first
quarter of this year.
"A correction in currencies could deepen further if falls in
stocks and oil prices turn out to be big corrections to their
huge rallies since the beginning of this year," said Minoru
Shioiri, chief manager of forex trading at Mitsubishi UFJ
Securities.
"We will need to keep watching moves in the stock market to
decide whether or not this corrective phase is something that
could end within a day or two."
(Additional reporting by Aiko Hayashi; Editing by Joseph
Radford)
