* Euro hits 2-week low against dollar and yen
* Global shares, oil prices stumble, denting risk demand
* NY factory activity surges but consumer worries persist
* Japan Q2 GDP up; China cuts Treasury holdings
(Adds details; updates prices)
By Vivianne Rodrigues
NEW YORK, Aug 17 (Reuters) - The euro hit a two-week low
against the dollar and neared a one-month trough against the
yen on Monday as world stock markets fell and doubts about a
U.S. recovery prompted investors to cut exposure to risk.
The yen rallied across the board as investors bought it as
a safe haven, while a slide in oil prices hit currencies such
as the Australian dollar, which retreated from recent 10-month
highs against the greenback.
A multimonth equity rally started to sputter late last week
after data showed U.S. consumer sentiment declined for a second
straight month. Stocks in Asia responded Monday by falling more
than 3 percent and the sell-off continued in Europe and on Wall
Street.
Data showing Japan's economy grew between April and June
for the first time in five quarters was largely ignored, and a
surge in New York state factory activity had only a modest
effect.
"People have started to feel that the market rally moved
well ahead of the actual economic improvement," said Vassili
Serebriakov, currency strategist at Wells Fargo in New York.
"The rebound in the S&P has been its fastest in the
post-war (period), and so people are getting nervous that
things have come too far, too fast," said Rob Minikin, senior
currency strategist at Standard Chartered in London.
In late afternoon trading in New York, the euro was down
about 0.9 percent at $1.4079 <EUR=>, just above a two-week low.
It was down 1.5 percent at 132.81 yen <EURJPY=> after hitting
its lowest level since July 22. The dollar fell 0.5 percent to
94.45 yen <JPY=>.
A pullback in risk appetite in the near term should favor
the dollar, Brian Kim, a currency analyst at UBS AG said in a
note.
Sterling hit a one-month low earlier and was last down 1.2
percent at $1.6337 <GBP=> while the Australian <AUD=> and New
Zealand dollars <NZD=> each fell sharply against the
greenback.
European shares and U.S. stock indexes fell about 2 percent
or more on the day, while oil prices <CLc1> tumbled to a
two-week low.
Some analysts also said coupon payments on U.S. Treasuries
worth $20 billion to $25 billion on Monday were helping to push
the dollar down against the yen.
JAPAN'S GDP, TREASURY FLOWS DATA
Data showing Japan's economy pulled out of recession in the
April-June period did little to improve sentiment, and analysts
said yen strength had more to do with safe-haven purchases by
investors eager to dump stocks and higher-yield currencies.
While Japanese government stimulus spending helped the
economy expand 0.9 percent in the quarter, ending its longest
recession in decades, analysts said the road to sustainable
recovery would be long. For more, see []
U.S. government data showed China cut Treasury holdings in
June by the biggest percentage in nearly nine years, though net
inflows into long-term U.S. securities rose to $90.7 billion.
China, the biggest U.S. Treasury holder, sold mostly
short-term bills in June. If it continues, that could be a
"significant drag on the dollar," said Alan Ruskin, chief
international strategist at RBS Securities in Greenwich,
Connecticut. []
But "it is clear that some of this money will simply stay
in dollars and extend out the curve at the right yield."
(Additional reporting by Steven C. Johnson; Editing by
Padraic Cassidy)
