* Nikkei jumps 2.5 pct, lends support to dollar/yen
* Euro zone sentiment data helps euro
* Australian dollar near 3-week high, aided by Chinese data
By Anirban Nag
LONDON, Sept 9 The yen fell on Monday, losing ground after Japanese stocks rallied following Tokyo's winning bid to host the 2020 Olympics and an upgrade of second-quarter economic growth.
The euro rose against the dollar to $1.3195, on better-than-expected euro zone sentiment data.
Its gains were more pronounced against the yen, though. The Olympics win for Tokyo could translate into a big boost for the Japanese economy and a shot in the arm for Prime Minister Shinzo Abe who is attempting to reflate the economy after decades of below-par growth and deflation.
The Tokyo bid committee reckons hosting the Olympics would boost the economy by 3 trillion yen ($30 billion) over the next seven years..
This boosted the Nikkei, which jumped to a five-week high and since the yen has an inverse correlation with Tokyo shares, the currency slipped. The yen is safe-haven currency and tends to move in the opposite direction to riskier assets like stocks. Japanese stocks were also helped by a sharp upward revision of second-quarter growth data.
All of which led some speculators and traders to sell the yen. The dollar was up 0.4 percent on the day to 99.50 yen having hit a high of 100.11 yen earlier on Monday. The euro rose 0.5 percent to 131.34 yen.
Both the dollar and the euro have gained more than 14 percent this year against the yen as the Bank of Japan embarked on a massive monetary stimulus programme in April.
"The Olympics bid has added a bit more to the underlying negative yen trend," said Paul Robson, currency strategist at RBS Global Banking.
But the yen's weakness could be temporary with investors wary about a possible U.S.-led military strike against Syria that could lead to fresh safe-haven inflows.
FED TAPERING ON TRACK
Against the yen, the dollar recovered to around levels seen before Friday's weaker-than-forecast U.S. jobs numbers, which raised some doubts about whether the Federal Reserve will begin to scale back its stimulus programme next week.
However, comments by two Federal Reserve officials suggested stimulus unwinding was still on track.
While the euro was supported by the positive Sentix sentiment data, investors were keeping a wary eye on Rome where the Italian Senate is set to begin a debate on whether to expel former premier Silvio Berlusconi from parliament. If carried out, the move could threaten the country's ruling coalition.
A looming German general election was also keeping the euro in check. One-month euro/dollar implied volatilities climbed to 7.75/7.85 percent, from Friday's 7.45 percent, indicating some nascent nervousness amongst investors.
"Volatility surrounding euro should pick up this week, as we approach the German elections and Italian politics grab market attention," Morgan Stanley said in a note. "Higher volatility and a central bank that stands ready to push back against higher rates should weaken euro, in our view."
Meanwhile, the Australian dollar hit a three-week high at around $0.9225, benefiting from Chinese trade data. China is Australia's biggest export market.
The Aussie last stood at $0.9205, up 0.2 percent. It barely reacted to Saturday's national election result.