* Dollar/yen dips as Tokyo shares slip on Iraq conflict
* Euro struggles vs yen, hits four-month low
* Sterling above $1.70 vs dollar for first time in 5 years
(Adds quote, details)
By Anirban Nag
LONDON, June 16 The yen and the Swiss franc rose
on Monday, with the Japanese currency hitting a four-month high
against the euro, as investors sought a safe haven from
escalating conflict in Iraq.
Sterling, meanwhile, rose past $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 fell 0.25 percent to 101.80 yen, towards
the bottom of the 102.80-101.60-yen range seen so far this
month. The euro was down 0.2 percent at 137.85, having hit a
four-month low of 137.70 yen on trading platform EBS
earlier in the European session.
The yen was boosted by falling stocks. Japan's currency 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 concern 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 0.8990 francs
and 1.2177 respectively.
Other havens like gold also gained on Monday and oil prices
surged as Sunni insurgents solidified their grip on the north,
after a lightning offensive that threatens to dismember Iraq.
FED AND DOLLAR FOCUS
Rising oil prices could hamper global growth and the
geopolitical developments are likely to figure in the Federal
Reserve's latest policy meeting, scheduled for 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.
"Unless we have a huge move upward in oil prices, we do not
think that the Fed will be too worried about the geopolitical
situation," said Geoff Yu, currency analyst at UBS. "We expect
the Fed to keep withdrawing monetary stimulus and we are
positive on the dollar in the medium term."
The euro was flat at $1.3540, not far from a
four-month trough of $1.3503 hit earlier this month when the
European Central Bank eased monetary policy.
Sterling hit a peak of $1.7011, its highest since August
2009. Bank of England Governor Mark Carney said on Thursday that
rates might rise sooner than financial markets expect, in a
surprisingly stark warning that policy may start to tighten
before year's end.
The euro fell to as low as 79.59 pence, a trough
not seen since October 2012. The pound was bolstered by comments
from BoE policymaker Charlie Bean, who said on Sunday he was
optimistic about the economy and would welcome the bank's
beginning to "normalise" rates.
(Editing by Larry King)