* Yen vs dlr hits highest since February as carry unwound
* Dollar up vs Aussie, sterling, euro
* G8 draft statement doesn't mention FX; Q2 earnings eyed
(Recasts; updates prices, adds details)
NEW YORK, July 8 (Reuters) - The Japanese yen soared across
the board in its biggest jump in months on Wednesday as renewed
concerns about a slow global economic recovery prompted
investors to rush to undo bets against the Japanese currency.
Gains in the yen multiplied after it traded through key
technical levels on the dollar, traders said. Investors then
reversed trades where they had borrowed in yen to buy
higher-yielding currencies.
As traders sold high-yielding currencies, they bought back
yen.
Risk aversion also helped bolster the dollar against other
major currencies adding to the momentum from a Japanese
official saying leaders of the Group of Eight major economies
did not discuss the dollar's role as the key global currency at
Wednesday talks on the economy. For related news, see
[]
"Risk assets are still being liquidated," said Brian Dolan,
chief currency strategist at Forex.com in Bedminster, New
Jersey. "That's hitting the yen crosses and carry trades are
under significant pressure. And most of the selling so far of
those yen crosses has been absorbed by dollar/yen."
News that Chinese President Hu Jintao, who was due to
attend the summit in Italy, was returning home to deal with
unrest in the western region of Xinjiang had already dampened
speculation that any currency comment would be added.
[]
Investors instead focused on whether Chinese economic
growth will be a driver of the global economy, given its
internal problems.
The euro fell to 127.05 yen, its lowest since May,
according to Reuters data in New York. It last traded down 3.1
percent at 127.87 yen <EURJPY=R>.
The dollar slid 2.7 percent to 92.27 yen <JPY=>, having hit
its lowest since February, according to Reuters data in New
York.
It was the biggest one-day move in the euro against the yen
since November at current prices. And the biggest one-day move
by the dollar against the yen since March at current prices.
The euro was down 0.5 percent against the dollar at $1.3849
<EUR=>.
Draft statements for the G8 leaders and for leaders of
emerging market economies, made no direct reference to foreign
exchange, though they highlighted "significant risks" facing
the world economy. []
China had been one of the most vocal governments in seeking
to discuss an alternative international currency to the U.S.
dollar, but political turbulence in China has turned investors'
attention elsewhere.
"Part of the optimism earlier about a worldwide recovery
was based on the assumption that China would be this locomotive
of growth and keep the rebound going," said Boris Schlossberg,
director for currency research, at GFT Forex.
"As the political situation in China becomes problematic,
it provides another reason for investors to sell any
high-yielding currencies, benefiting the dollar and the yen,"
he added.
Alcoa Inc <AA.N>, the first Dow Jones industrials component
to report quarterly earnings, is expected to post its third
consecutive quarterly loss later on Wednesday.
The Australian dollar fell by 1.8 percent to $0.7750 <AUD=>
and fell to its lowest since mid May against the yen
<AUDJPY=R>, shrugging off data earlier on Wednesday showing a
surge in Australian consumer confidence.
Sterling also hit a one-month low against the dollar
<GBP=>, continuing to fall following weak UK industrial
production data on Tuesday and on concerns that the Bank of
England may expand asset purchases under its quantitative
easing program.
