* Conflict in Iraq stoke safety bids for yen, Swiss franc
* Russia-Ukraine gas dispute adds safe-haven demand
* Euro recovers from four-month lows vs yen
* Sterling above $1.70 vs dollar for first time in 5 years
(Updates market action, adds quote)
By Richard Leong
NEW YORK, June 16 The yen and the Swiss franc
rose on Monday with the Japanese currency briefly touching a
four-month high against the euro, as investors sought safety
from Iraq's worsening conflict and a gas dispute between Russia
Sterling climbed above $1.70 against the dollar for
the first time in nearly five years, with investors betting that
the Bank of England will tighten monetary policy before the end
of the year.
The dollar slipped as traders await clues from the U.S.
Federal Reserve on the timing of an interest rate increase amid
doubts about the economic recovery.
"You have the geopolitical unrest and there are questions
about the U.S. recovery," Alfonso Esparza, senior currency
strategist at Oanda in Toronto, said of the factors behind the
safe-haven bids for yen and Swiss franc.
The dollar fell 0.23 percent to 101.82 yen at the low
of the month's trading range, while the euro fell to a
four-month low against the yen earlier before recovering to
138.16 yen in U.S. trading.
Over the past week, Sunni Islamist fighters solidified their
grip on northern Iraq in a bid to overturn the Shi'ite
On Monday, Russia cut off gas to Ukraine in a dispute over
unpaid bills that could disrupt supplies to the rest of Europe.
The dollar and euro were also weaker against the Swiss
franc, another safe-haven currency, trading at 0.8975 francs
and 1.2179 francs respectively.
Rising oil prices due to geopolitical tension could hamper
global growth and may curb U.S. central bankers from considering
to raise interest rates too soon.
Analysts anticipate Fed policymakers, who will meet on
Tuesday and Wednesday, will tighten policy about a year from
now. The dollar could fall if they signal they may wait longer
to raise rates.
"The Fed may sound dovish and hint at a U.S. rate hike later
than what the market expects. This may keep a lid on the
dollar," said Joe Manimbo, senior market analyst at Western
Union Business Solutions in Washington.
The dollar fell against most major currencies.
The euro rose 0.2 percent to $1.3569 higher than the
four-month trough of $1.3503 earlier this month when the
European Central Bank cut rates.
Sterling hit a peak of $1.7011, its highest since August
2009 before easing to $1.6978 in U.S. trading.
Comments from Bank of England Governor Mark Carney spurred
bets the BoE may tighten policy before year-end. The pound rose
further on remarks from BoE policymaker Charlie Bean, who said
on Sunday he would welcome the bank's beginning to "normalise"
The euro fell to as low as 79.59 pence, the
lowest since October 2012 before bouncing up to 79.91 pence.
(Additional reporting by Anirban Nag in London; Editing by
Larry King and Nick Zieminski)