* Dollar and yen up broadly
* Yen extends rises to 2-mth high vs dlr, 3-wk peak vs euro
* Commodities-linked Aussie dips after oil prices stumble
By Satomi Noguchi
TOKYO, May 18 (Reuters) - The dollar rose against a basket of currencies on Monday, while the yen gained broadly and hit a two-month peak versus the greenback, as falling stock markets prompted investors to close out bets on riskier currencies.
The euro remained under selling pressure and fell to a three-week low against the yen after data showed the euro zone economy contracted at its fastest pace on record, pushing down stocks in Europe and the United States late last week.
The Australian dollar, a commodities-linked currency, fell after oil prices ended almost 4 percent lower late last week on worries that a global economic recovery may be far off.
"The yen in particular is drawing funds away from other currencies including commodities-related units which had been bought sharply before," said Yoshihisa Kanzaki, a trader at Shinkin Central Bank.
"The near-term focus is on how much further yen crosses will extend falls, although dollar/yen lows around 94.50 yen look to have firm support after several attempts to break those levels failed on Friday," Kanzaki said.
A drop in Asian shares was providing support to the yen and the dollar as investors bought back those currencies used in recent weeks to fund investments in riskier and higher-yielding currencies.
The Nikkei share average fell 2.8 percent, hovering just above the psychologically important 9,000 level, while Hong Kong shares slid 2.5 percent following data showing a record contraction in the local economy.
Oil prices hovered around $56 per barrel in Asian trade on Monday following a sharp drop on Friday with dealers becoming increasingly pessimistic about the outlook for global energy demand.
"The euro and the Aussie, which had risen sharply before, are in a corrective phase with optimism about a global economic recovery being reduced," said a senior manager of forex trading at a Japanese brokerage.
"But for dollar/yen, I think the market is still undecided on a directional bet without a clear factor other than stocks, while many players expect it to stay largely within 95-100 yen for a while," the trader said.
Traders will watch whether the yen can sustain broad gains before reports due later in the week that are expected to show Japan's economy suffered its deepest quarterly contraction since World War Two, while economists forecast a return to growth in the following quarter.
The dollar index, a gauge of the greenback's performance against six major currencies, rose 0.2 percent from late U.S. trade on Friday to 83.161.
The European single currency dipped 0.4 percent to $1.3436.
The euro slid as low as 126.99 yen on trading platform EBS, its lowest since April 29, before recovering a tad to 127.30 yen, still down 0.8 percent on the day.
The dollar fell 0.5 percent to 94.75 yen, staying near a two-month low of 94.55 yen struck earlier on EBS.
The Australian dollar fell 0.5 percent to $0.7472 and dipped 0.7 percent to 70.73 yen, near a three-week low around 70.50 yen touched earlier. (Editing by Chris Gallagher)