FOREX-Euro dips vs dollar, yen as risk aversion rises

* Euro hits 2-week low vs dollar and yen

* Europe shares, oil prices stumble, denting risk demand

* U.S. factory activity surges; consumer worries persist

* Japan Q2 GDP rises 0.9 pct qtr/qtr (Adds comment, U.S. data, updates throughout, changes byline, changes dateline, previous LONDON)

By Steven C. Johnson

NEW YORK, Aug 17 (Reuters) - The euro hit a two-week low against the dollar and yen on Monday as a slide in oil prices and global stock markets and doubts about the strength of a U.S. recovery prompted investors to cut exposure to risk.

The yen, which usually gains when investors grow nervous, rallied across the board, while higher-yield, higher-risk currencies such as the Australian dollar retreated from recent 10-month highs against the U.S. currency.

Investors looked for temporary safe havens in the dollar and yen after Hong Kong stocks fell more than 3 percent and oil prices dropped. That followed Friday's data showing a second straight monthly decline in U.S. consumer sentiment, stoking concern about the strength of an anticipated U.S. recovery.

Figures showing Japan's economy grew in the second quarter were largely ignored, while the Federal Reserve Empire State index showing New York state factory activity surged in August only trimmed some of the dollar's gains against the euro. [ID:nN17371906]

"The jump in the index is pretty healthy and it may contribute to the paring of the massive risk aversion trade from overnight," said Boris Schlossberg, director of currency research at GFT Forex in New York. "But the larger theme continues to be the consumer and he is missing in action."

The euro was last down about 0.9 percent at $1.4075 , just above a two-week low. It was down 1.1 percent at 133.20 yen while the dollar fell 0.4 percent to 94.63 yen .

Sterling hit a one-month low and was last down 1.1 percent at $1.6322 while the Australian and New Zealand dollars each lost 2 percent against the greenback.

Investors have started to worry that markets have grown too optimistic about the near-term recovery prospects, analysts said.

"The rebound in the S&P has been its fastest in the post-war (period)," said Rob Minikin, senior currency strategist at Standard Chartered in London, "and so people are getting nervous that things have come too far, too fast."

European shares <.FTEU3> and U.S. stock futures both fell around 2 percent on the day, while oil prices fell to a two-week low.

Some analysts said coupon payments on U.S. Treasuries worth $20-25 billion on Monday were helping to put selling pressure on dollar against the yen.

Data showing Japan's economy grew for the first time in five quarters in the April-June period did little to improve sentiment, even as government stimulus spending helped the economy expanded 0.9 percent in the quarter, ending its longest recession in decades. [ID:nT212505]

But analysts said the road to sustainable recovery in Japan will be a long one.

U.S. Treasury data on Monday showed net capital outflows from the United States fell to $31.2 billion in June, down from the prior month's $65.7 billion outflow, while net long-term inflows rose to $90.7 billion. [ID:nN17305646]

(Additional reporting by Vivianne Rodrigues in New York and Naomi Tajitsu in London) (Editing by Theodore d'Afflisio)