* Dollar/yen dips as Tokyo shares slip on Iraq conflict
* Euro struggles vs dollar near 4-month low
* Sterling above $1.70 vs dollar for first time in 5 years
(Recasts, adds quote, details)
By Anirban Nag
LONDON, June 16 The yen and the Swiss franc rose
on Monday, with the Japanese currency trading near a four-month
high against the euro as investors sought a safe haven amid
escalating conflict in Iraq.
Sterling, meanwhile, hit five-year highs against the dollar
, rising above option barriers at $1.70, with investors
betting that the Bank of England will tighten monetary policy
before the end of the year.
The dollar fell 0.2 percent to 101.80 yen, moving
towards the bottom of its relatively tight 102.80-101.60 yen
range seen so far this month. The euro was down 0.2 percent at
137.73, not far from its four-month low of 137.705 yen
struck last week.
The yen was boosted by falling stocks. It has an inverse
relation with riskier assets like shares, especially Tokyo's
Nikkei index. The Tokyo index shed 1 percent as the
insurgency in Iraq escalated, raising concerns over oil exports
from OPEC's second-largest producer.
"The subdued risk sentiment and concerns about effects of
rising tensions in Iraq on oil prices and pro-cyclical assets,
have kept the yen bid," said Petr Krpata, analyst at ING.
"With sentiment unlikely to change materially today, we see
modest downside risk to dollar/yen but expect the 101.60 support
The dollar and the euro were both weaker against the Swiss
franc, another safe-haven currency, trading at 0.8995 francs
and 1.2180 respectively.
Other safe-haven assets like gold also gained on Monday
while oil prices surged as Sunni insurgents solidified their
grip on the north after a lightning offensive that threatens to
Rising oil prices could hamper global growth prospects and
the latest geopolitical developments are likely to figure in the
Federal Reserve's latest policy meeting scheduled this week.
Currently, expectations are for the Fed to begin raising
rates about a year from now, and the dollar is seen benefiting
from any hawkish comments by the central bank.
"Key points are if Fed Chair (Janet) Yellen upgrades her
view on the economic view in light of recent economic indicators
and if the central bank raises its yield forecast, which would
reignite expectations for earlier rate hikes," said Junichi
Ishikawa, market strategist at IG Securities in Tokyo.
"Whether geopolitical risks have any currency impact depends
on how the situation in Iraq and Ukraine impacts the equity
markets, but so far their reaction appears limited," he said.
The euro traded 0.2 percent lower at $1.35155, within
sight of a four-month trough of $1.3503 hit earlier this month
when the European Central Bank eased monetary policy.
Sterling, which has been boosted by a hawkish approach taken
by the BoE, hit a peak of $1.7011, its highest since August
2009. Governor Mark Carney had said on Thursday that rates could
rise sooner than financial markets expect, in a surprisingly
stark warning that policy may start to tighten before year end.
The euro fell to as low as 79.64 pence, a trough
not seen since November 2012.
(Additional reporting by Shinichi Saochiro in Tokyo; Editing by