FOREX-Yen, franc profit from emerging nerves
* Euro suffers from safe haven bid on China, Ukraine nerves
* Dollar index near two week high
* Swiss franc at 10-month high
LONDON, Feb 27 (Reuters) - The yen and the Swiss franc rose on Thursday as jitters over the chance of Russian intervention in Ukraine added to concern around global emerging markets and drove capital towards the currency world's traditional safe havens.
The franc hit its highest to the euro in 10 months in early European trade, rising 0.2 percent against a euro also buffetted early on by signs German inflation may have slowed in February.
The broad flight into currencies like the yen and franc that tend to draw investors in times of market stress or risk, also saw the yen gain 0.7 percent against the European single currency and half a percent against the dollar.
Those were the biggest moves this week on major foreign exchange markets and may in part also reflect uncertainty over a big decision in front of the European Central Bank next week on whether to take further action to spur growth.
They also come after the most severe fall in years for the value of China's yuan, reflecting worries that an economy that has propped up global growth for a decade is stuttering.
"This is definitely a risk aversion play although I wouldn't put it mainly down to events in Ukraine," said Peter Kinsella, strategist with Commerzbank in London. "Chiefly this is concern over emerging markets as a whole and in essence China."
The Australian dollar had led moves on major currency markets in early European trade, down half a percent against the dollar after weak data on business investment.
A big loser in the second half of last year, the Aussie has regained a foothold in the past month on the back of a change in tone by the Reserve Bank of Australia, previously intent on weakening the currency to support growth.
But most strategists say fair value for the Aussie is well below current levels and it fell to $0.8922.
"We're not a million miles from the level we think we should eventually get to, which is around $0.85 but I don't think we'll see that now," said Derek Halpenny, strategist with Bank of Tokyo Mitsubishi UFJ in London.
Regional data suggested German annual inflation probably fell in February, pointing to the prospect of a lower euro zone number on Friday that would add to pressure on the ECB to act.
Several market players said the euro zone numbers on Friday, forecast to show price growth of 0.7 percent, would be the tiebreaker for a market deeply divided over whether the bank will tweak policy next Thursday.
"I would say the market is positioned a little less than 50-50 on the chances of action by the ECB," said Halpenny.
"If you'd asked me a couple of weeks ago, I'd have said there was more certainty (that they would ease) so that is probably edging lower but I think a lot of people may be waiting for the inflation numbers to make their minds up."
The U.S. dollar held near a two-week high against a basket of major currencies with markets looking to initial jobless claims numbers at 1330 GMT for more signs on the pace of U.S. growth.
The failure of the U.S. economy to build more strongly on a pickup at the end of last year has knocked back many of the bets made at the start of this year on a stronger dollar.
But with policymakers putting much of that down to a winter of harsh weather, there is still plenty of faith that the recovery will gain pace in the months to come.
The dollar index was a touch higher at 80.486, close to Wednesday's peak of 80.524, its highest since Feb. 13.
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