* Dollar hits 1-month high vs euro on risk aversion
* High yielders such as NZ, Australian dollars suffer
* Low-risk drive prods yen to 4-week high vs dollar (Adds comment, updates prices)
By Naomi Tajitsu
LONDON, Jan 13 (Reuters) - The dollar rallied broadly on Tuesday, hitting a one-month high against the euro as falling shares and weak oil prices underlined the global economy's problems, cranking up the drive to shed risky positions.
Escalating risk aversion also boosted the low-yielding Japanese yen to its highest level against the dollar in nearly four weeks.
The euro fell as low as $1.3221, according to Reuters data, its weakest level since mid-December, as investors also awaited a European Central Bank policy meeting on Thursday, when analysts expect the Governing Council to cut interest rates by 50 basis points to 2.0 percent.
The threat of ratings downgrades to some euro zone countries also stung the euro, while the possibility of a lower rating on New Zealand's foreign currency debt pushed the New Zealand dollar to a one-month low against the dollar.
"The main story is risk aversion, with the dollar still trading as a safe-haven asset," said Christian Lawrence, currency strategist at RBC in London.
"Currencies are closely tracking equities right across the board. To follow the FX market is really about stock watching at the moment."
A 2.4 percent slide in European shares, along with a 2.5 percent fall in U.S. crude oil prices, reminded investors that the global economy is rapidly deteriorating, prompting them to dump higher-yielding currencies.
Further emphasising weakness in the euro zone, ECB President Jean-Claude Trichet on Tuesday said that authorities could not afford to let their guard down in dealing with challenges in the wake of the financial crisis
By 1006 GMT, the euro traded 0.6 percent lower at $1.3292, hovering near its one-month low touched in early London trade. Against the yen, it slipped 0.7 percent to 118.39 yen, having fallen to 117.69 yen, likewise its weakest in a month.
"The market is still confident that the United States can deal with a recession better than the euro zone," said Ulrich Leuchtmann, head of currency research at Commerzbank in Frankfurt.
The New Zealand dollar tumbled 3.4 percent to $0.5540, its weakest level since mid-December, while the Australian dollar fell more than 1.5 percent to $0.6680, also a one-month low.
The high-yielding currencies also hit roughly one-month lows against the yen as investors unwound yen carry trades, in which the low-yielding Japanese currency was used to buy assets in higher-yielding ones.
The U.S. dollar rose half a percent against a basket of currencies to 83.591, but traded 0.2 percent lower at 88.95 yen, having slipped as low as 88.80 yen according to electronic trading platform EBS, its weakest level since mid-December.
EURO PRESSURED
Adding to selling pressure on the euro was news on Monday that Spain became the third euro zone country since Friday to be warned by Standard & Poor's rating agency that its credit rating is under threat from the global credit crisis.
This triggered an extreme widening in intra-euro zone government bond spreads, driving some yield premiums over benchmark German Bunds to their biggest on record.
"The negative news coming out the euro zone is pretty relentless at the moment," said Lawrence at RBC, adding that this could push the single currency even lower in the near term.
The New Zealand dollar was battered after S&P warned on Tuesday of a possible downgrade to the country's relatively high-yielding foreign-currency debt.
Investors awaited a speech by Federal Reserve President Ben Bernanke in London at 1300 GMT. Investors are looking for any more clues on plans for quantitative easing measures the U.S. central bank might take after slashing interest rates to virtually zero last month.
(Editing by Ruth Pitchford)