* Yen also at 21-month low versus euro
* Investors await U.S. Federal Reserve comments
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By John Geddie
LONDON, Sept 19 (Reuters) - The dollar hit an eight-week high against the yen on Tuesday as U.S. central bank policymakers meet to discuss further monetary tightening, with renewed calm over North Korea easing demand for perceived safe havens like the Japanese currency.
The yen, which gains in times of crisis because Japan is the world’s largest creditor nation and benefits from speculation about repatriation of Japanese money from overseas, also slid to a 21-month low against the euro.
Another safe haven, the Swiss franc, was close to a multi-year low against the euro and analysts said this trend would remain as long as the U.S. continues to favour a diplomatic solution to the North Korean crisis.
In a speech scheduled for 1430 GMT on Tuesday, U.S. President Donald Trump will urge United Nations member states to increase pressure on North Korea to give up its nuclear weapons.
The U.N. Security Council has already imposed several rounds of sanctions on North Korea, but the U.S. ambassador to the United Nations, Nikki Haley, has said that most non-military options have all but been exhausted.
“Trump is erratic and there have been conflicting signals from people in his administration, but as long as the market is confident the U.S. approach is going to remain diplomatic, the movement will be away from safe havens,” said Jane Foley, senior FX strategist at Rabobank in London.
Aside from the Trump speech, investors are now preparing for potentially more hawkish statements from the Federal Reserve after its two-day policy meeting ends on Wednesday, especially after the Bank of England surprised investors last week with talk of a possible rate hike.
The Fed is widely expected to announce that it will start paring its balance sheet, with the reductions seen likely to start this year.
It is expected to keep rates on hold, but investors will be watching for fresh hints on the chances of another rate rise this year and how many could be expected in 2018.
The dollar climbed as high as 111.88 yen on Tuesday , its highest level since July 26 and up around 0.2 percent on day.
The yen has shown little reaction to the possibility of Japanese Prime Minister Shinzo Abe calling a snap election for as early as October to take advantage of his improved approval ratings and disarray in the main opposition party.
The euro traded at 134.16 yen, up over half a percent against the Japanese currency and at its highest since December 2015. The single currency was also close to its highest against the Swiss franc since January 2015.
Sterling steadied above $1.35, recovering some ground after a nearly 1 percent slide on comments from the Bank of England’s governor Mark Carney who said on Monday interest rates rises in coming months would be limited and gradual.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Reporting by John Geddie; Additional reporting by Shinichi Saoshiro and Masayuki Kitano; Editing by Catherine Evans)