* Ukraine tensions heighten on Russia's military intervention
* Rise in U.S. spending and income helps dollar
* Ruble sinks to all-time low vs dollar, euro
* Russia confirms FX intervention to prop up ruble
By Gertrude Chavez-Dreyfuss
NEW YORK, March 3 The dollar and yen gained on Monday as investors sought shelter in these currencies, as Russia's invasion of the Ukraine's Crimean peninsula fanned geopolitical tensions.
The greenback was further supported by economic data showing an increase in U.S. personal income and spending in January despite one of the worst winter seasons in recent memory.
But the worsening situation in Ukraine has rattled investors more, even though this week is scheduled to be a heavy one in terms of economic data and central bank monetary policy decisions.
The Russian ruble fell to a record low against the dollar and euro. The dollar hit an all-time peak of 36.6750 rubles , with the euro also touching a record high of 50.5300 .
"Investors turned to classic safe havens amid heightened tensions in Ukraine," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
"The deteriorating situation in Ukraine poses a fresh threat to the global economy. The world economy is already seen on a fragile footing due to mounting signs of weakness in China."
Ukraine said Russia was building up armoured vehicles on its side of a narrow stretch of water closest to Crimea after Russian President Vladimir Putin declared at the weekend he had the right to invade his neighbour to protect Russian interests and citizens.
The Russian central bank, meanwhile, confirmed on Monday it has increased its involvement in the currency market after the ruble plummeted and said it will continue to shift its main monetary policy focus to inflation targeting after the situation on markets stabilizes.
Traders estimated the central bank sold in excess of $10 billion on Monday to prop up the ruble.
In midday trading, the dollar was up 1.5 percent versus the Russian currency at 36.5970, while the euro rose 1.2 percent to 50.3480.
The United States threatened to isolate Russia economically after Putin's action provoked what Britain's foreign minister called "the biggest crisis in Europe in the twenty-first century".
"Any sign of potential military action by Western nations would cause more risk aversion in the forex market because investors rarely view the prospect of war as positive especially when it involves major world powers like the U.S. and Russia," said Kathy Lien, managing director at BK Asset Management in New York.
In midday trading, the dollar index rose 0.3 percent to 79.951.
The dollar was also underpinned by data showing U.S. consumer spending rose more than expected in January, increasing 0.4 percent, as outlays on services recorded their largest increase since late 2001, likely driven by demand for heating. Income also gained 0.3 percent in January after being flat the prior month.
The dollar's gains pushed the euro 0.3 percent lower at $1.3760.
However against the safe-haven yen, the dollar fell 0.4 percent to 101.43, after earlier dropping to a month-low of 101.17 yen. The euro also dropped versus the yen, falling 0.6 percent to 139.67 yen.
The euro is the first safe port of call for capital from eastern European countries such as Poland, Latvia or Lithuania who may be the first to feel the fallout of any conflict or sanctions. But the euro zone also has close ties to Russia.