* Yuan down against dollar and yen
* Yen benefiting more broadly, helped by Ukraine worries
* Euro dips on below-forecast trade, sentiment data
* U.S. CPI, housing-related data awaited
LONDON, March 18 (Reuters) - The yuan deepened its month of losses against the dollar on Tuesday amid more signs China’s problems with a slowing economy and heavily indebted corporate sector are becoming this year’s big issue for markets.
The Japanese yen, which some players in Asia say is now benefiting most strongly amongst major currencies from the yuan’s fall, gained just under 1 percent against the Chinese currency, helping pull it higher against the dollar.
Reversing one of the past decade’s few sure bets in the foreign exchange market, the yuan is down around 2.5 percent in the past month. That move has resumed since officials widened the trading band for the currency over the weekend.
A survey of 970 global investors by Barclays showed that China’s problems have replaced the U.S. Federal Reserve’s reining in of monetary policy as the biggest concern for market players since the start of 2014.
“I’ve squared up now but I think there’s a risk that the yuan could go to 6.30-6.40 per dollar,” said Graham Davidson, a foreign exchange trader with Australian bank NAB in London.
“The yen will tend to gain against the dollar as the yuan weakens.”
The yuan was trading at 6.1816 to the dollar, down 0.4 percent.
There are differing schools of thought on the fallout for Japan of a weaker yuan. On the one hand it allows Japan’s big manufacturers to invest more cheaply in producing cars and electronics in China while the competitive advantage of those factories also grows. Profits can then flow back into Japan.
On the other hand a generally weaker Chinese economy poses problems for Japan given China’s importance as a market for Japanese products and investment.
Dealers say that many of those who were betting strongly at the start of this year on further gains for the yuan are still to be shaken out and that the currency could go much lower.
The main barrier to that is the People’s Bank of China itself, which has kept its reference rate for the yuan around 6.13 for a week, encouraging speculation it may defend the top end of its newly widened 2 percent band around 6.25 per dollar.
“If the top of the band is 6.25-6.27 they are not showing any great signs of wanting to let that go,” Davidson said.
The yuan - which is not fully convertible internationally and trades in a complicated system of “offshore” and Chinese “onshore” rates - was 0.8 percent lower against its Japanese counterpart at 16.3906.
There was little change overnight in the situation in Ukraine, a focus of market attention in the past two weeks. The yen had suffered on Monday after Western powers took only minimal steps against Russia over its support for a separatist referendum in Crimea, easing concerns of a blowup in relations.
The euro continued to look strong despite a dip after a poor batch of trade and sentiment data which underlined uncertainty over Europe’s immediate economic prospects.
The single currency has been another of this year’s big surprises, confounding predictions of a slide against the dollar as the U.S. economy improves and much of Europe’s lags behind.
Much of that stems from the European Central Bank’s refusal to take - or at least signal the prospect of - more extreme action to pump more money into the economy.
Euro zone trade and German ZEW sentiment data were not on balance expected to shake that view and the euro was just over 0.1 percent lower at $1.3910, still within sight of 2-1/2 year highs reached last week and the big symbolic level of $1.40.
The yen gained almost 0.4 percent against the dollar to 101.41 in European trade with dealers still seeing headlines from Russia and Ukraine as an important driver. Any re-emergence of tensions would also support the Swiss franc.
Russian President Vladimir Putin started delivering a speech to the Russian parliament just after 1100 GMT.
“We’ve seen some easing off of the relief rally we saw yesterday but it is going to stay at the top of the market’s list of concerns,” said Lee Hardman, strategist with Bank of Tokyo Mitsubishi-UFJ in London.
“Right now we’re in a kind of stalemate situation and generally we just need to see how it develops. Russia could clearly decide to take reciprocal action at some stage which might for example have knock-on effects for the euro zone.”