* Dollar climbs vs euro before German Ifo survey
* Aussie hits 7-mth low on credit jitters, carry unwind
* Kiwi falls 1 pct on wider monthly trade deficit
* Sterling dips near 2-yr low, further slide eyed
By Shinichi Saoshiro
TOKYO, Aug 26 (Reuters) - The dollar climbed towards a
six-month high against the euro on Tuesday before the German Ifo
survey of business sentiment, with investors seeking clues on
whether the euro zone economy is hurting enough for a cut in
interest rates.
The U.S currency jumped against the Australian and New
Zealand dollars as renewed jitters about the financial sector,
highlighted by the ninth U.S. bank failure this year, prompted
market players to trim carry trades.
The Aussie hit a seven-month low against the dollar,
extending its slide as the drop in global stocks prompted
investors to cut back on carry trades by selling higher-yielding
currencies and buying back the low-yielding yen. Japan's Nikkei
average <> lost 0.7 percent.
"Though this is not always the case, efforts to reduce risk
exposure is a short-term factor lifting the dollar," said Tohru
Sasaki, chief forex strategist at JP Morgan Chase.
"Dollar weakness previously prompted bids into the Aussie and
kiwi, but such positions are being unwound with the dollar
rejuvenated and with commodity prices peaking," he said.
Signs of a broadening global economic slowdown have given the
dollar a boost in the past month as investors have dumped the
currencies of economies losing steam, such as the euro and
Aussie, as well as commodities.
The pound slipped back near a two-year low struck the
previous day after data last week showed British economic growth
stalling in the second quarter, stoking expectations for the Bank
of England to trim interest rates.
Sterling dipped 0.4 percent from late U.S. trade to $1.8453
<GBP=D4>, back near the two-year trough of $1.8405 struck on
Monday.
Traders said the beleaguered pound may win a reprieve if the
Ifo survey throws the attention back on the euro zone's economic
woes. The Ifo is forecast to slip to 97.1 in August from 97.5 the
previous month.
British financial markets will reopen later in the day after
being closed on Monday for a bank holiday.
The dollar rose around 0.4 percent to 109.68 yen <JPY=>,
holding up even though most other major currencies slid against
the yen. The euro fell 0.3 percent to $1.4707 <EUR=>, skidding
back towards the six-month low of $1.4630 hit last week.
DOWN ON THE AUSSIE AND POUND
Market players said sterling remained a key market mover.
"The pound's retreat against the yen is leading the fall in
other crosses," said a trader at a Japanese trust bank. "The
situation is volatile but there is more downside for sterling
given the negative prospects for the UK economy."
The Aussie fell to a seven-month low of $0.8564 <AUD=D4>, as
investors sold riskier assets and high-yielding currencies on
renewed credit woes, and has now lost 15 percent against the
dollar since striking a 25-year high in July.
The kiwi slid more than 1 percent to $0.6964 <NZD=D4> after
data showed that New Zealand posted its highest monthly trade
deficit in 11 months in July.
The yen was up broadly on the unwind in carry trades,
although traders noted that the Japanese currency does not
respond as sharply to the moves in stocks as it did earlier in
the year when any sharp equity slide would send the yen flying
higher.
The pound touched a three-month low of 201.67 yen before
inching back to 202.36 yen <GBPJPY=R>. The Aussie retreated about
0.2 percent to 94.22 yen <AUDJPY=R>, not far from a four-month
low struck earlier in the month.
Investors also await Tuesday's data on U.S. new home sales
and home prices for clues on whether the battered property market
is stabilising -- which would be a relief for both the economy as
well as hard-hit financial firms holding mortgage assets.
(Additional reporting by Masayuki Kitano; Editing by Edwina
Gibbs)
