* Yen, dollar climb; swine flu concerns boost risk aversion
* Dlr hits 1-mth low vs yen as European shares fall 1.2 pct
* Euro slides 0.8 pct vs dlr; higher risk Aussie, kiwi fall
* Mexican peso falls 3 pct vs dollar, hits 3-week low
(Adds comment, updates prices, changes byline)
By Jessica Mortimer
LONDON, April 27 (Reuters) - The yen strengthened broadly on
Monday as concerns that an outbreak of swine flu in Mexico may
spread into a global pandemic sent investors seeking currencies
perceived as safe havens, while the Mexican peso fell sharply.
The flight to safety also boosted the dollar against
currencies other than the yen, and dented currencies seen as
higher risk such as the Australian and New Zealand dollars.
European shares fell 1.2 percent <> as investors feared
a flu pandemic could snap a nascent global economic recovery,
sending the yen -- which typically gains during heightened risk
aversion -- to a one-month high versus the dollar.
The Mexican peso fell around 3 percent versus the dollar
after more than 100 people were confirmed to have died in Mexico
from the swine flu virus, which has spread across North America
and as far as New Zealand. [].
The euro fell against the dollar, erasing most of Friday's
gains which came after the closely-watched German Ifo survey
showed business confidence improving more than expected, which
boosted hopes that the euro zone economy may be over the worst.
"Investors are taking some risk off the table, which is
helping safe haven currencies like the yen and the dollar,"
BTM-UFJ currency economist Lee Hardman said.
"It is still highly uncertain what the outcome will be. If
it does turn into a pandemic it couldn't have come at a worse
time," he said.
At 1142 GMT, the dollar fell 0.6 percent against the yen to
96.58 yen <JPY=>, close to an earlier one-month low around 96.48
yen, while the euro lost 1.3 percent to 126.91 yen <EURJPY=R>.
Against the dollar, the euro fell 0.8 percent to $1.3141
<EUR=>. The single currency had gained around 1.5 percent last
week following a string of improved euro zone economic data.
The Mexican peso <MXN=> traded at around 13.7300 per dollar,
after earlier hitting a 3-week low around 13.7410. The pair was
down around 3 percent on the day, having ended at 13.284 pesos
on Friday, according to the central bank's final reference.
Heightened risk aversion on concerns that the flu may turn
into a pandemic stung the higher-yielding Australian <AUD=D4>
and New Zealand <NZD=D4> dollars, which were each down around
1.2 percent against the U.S. dollar.
The New Zealand currency was also under selling pressure
because its central bank is expected to cut benchmark interest
rates to a record low of 2.5 percent this week and signal no
rise for a while. []
Analysts noted, however, that the intense risk aversion may
have been overdone and could fade, as long as there is no more
news of the flu outbreak spreading.
"To some extent the reaction has been overdone," said Lauren
Rosborough, senior currency strategist at Westpac Institutional
Bank in London.
"Unless it comes out that this has become a pandemic, I
would imagine the market will fade any rally in the dollar."
ECB AWAITED
Aside from the flu concerns, analysts said market
participants were looking ahead to the European Central Bank's
policy meeting on May 7.
The central bank is widely seen cutting its key interest
rate to 1 percent from 1.25 percent, and investors are watching
to see whether it will outline possible quantitative easing
measures to help boost the economy. []
ECB Governing Council member Nout Wellink was quoted in the
media as saying that the central bank should discuss lowering
rates below 1 percent [], while another member, Axel
Weber, was quoted separately as saying that a cut to 1 percent
was appropriate. [].
This week, U.S. first quarter gross domestic product data on
Wednesday will be closely eyed, while markets were also wary
ahead of a U.S. policy meeting on the same day.
A small majority of economists polled by Reuters felt the
Federal Reserve is likely to increase its Treasury purchase
programme from the current $300 billion [].
News from a meeting of world finance leaders in Washington
at the weekend was overshadowed by the swine flu concerns.
The finance leaders agreed there was a "break in the clouds"
of the economic storm but said more measures were needed to
ensure an end to the global recession. [].
(Reporting by Jessica Mortimer; additional reporting by Naomi
Tajitsu; Editing by Toby Chopra)
