* Yen, dollar gain; Aussie and sterling slide
* Global economy concerns curb risk demand
* July 8-10 G8 meeting eyed for FX diversification debate
(Adds comments, updates prices; changes dateline, previous LONDON and byline)
By Nick Olivari
NEW YORK, July 6 (Reuters) - The yen and the U.S. dollar gained broadly on Monday on eroding optimism about an improvement in the global economy, dragging equities lower and prompting investors to shun risk and buy currencies perceived to be safe.
Currencies including the Australian dollar and sterling, which have tended to benefit the most from any signs the global economy is on the mend, fell sharply as the fallout from grim U.S. jobs data last week continued.
Analysts said traders were coming to terms with signs recent economic data have not been consistently better than expected as in past months, and that it was possible for future readings to show weakness.
"People are re-assessing their views of the economy here and abroad," said John McCarthy, director of foreign exchange at ING Capital Markets in New York. "Risk aversion is the driving force."
In early New York trade, the dollar index, which tracks its performance against a basket of six major currencies, was up 0.4 percent on the day at 80.749 <.DXY>. A fall in European shares helped boost the U.S. currency.
The euro fell 0.4 percent to $1.3906, its lowest in nearly two weeks. Also prompting euro weakness was a survey showing an unexpected worsening in euro zone Sentix index, which tracks investor and analyst sentiment. [ID:nBAF001721].
The yen was the biggest beneficiary of risk aversion,
pushing the dollar
The Japanese currency also rallied on the crosses, pushing
the euro down 1.2 percent to 132.50 yen
Sterling, which is often seen as higher risk, fell 1.1
percent to a one-month low versus the dollar of $1.6153
The Australian dollar lost 0.9 percent to $0.7901
G8 SUMMIT IN FOCUS
Traders awaited a Group of Eight summit on July 8-10, watching for the possibility of a debate on an alternative to the dollar as a world reserve currency.
This week also sees central bank policy decisions in Australia and the UK, while in the United States, the earnings season for the second quarter gets underway.
Though any diversification of central bank reserves away from the dollar would take several years to materialize, investors are jittery about what comments may be made at this week's G8 meeting, particularly by China.
Analysts said they did not expect serious concerns to be raised about the issue this week, but some said the dollar's short-term vulnerability to comments about reserves suggested improving global fundamentals in the future may open the door to dollar weakness.
"While it may be too early to sell USD, the fact that the discussion has become so public suggests that USD weakness would accompany a global recovery as confidence is restored in the medium and long term," Barclays analysts said in a note.
The dollar received some support by reassurances from China, which said at the weekend that the U.S. currency would remain dominant for "many years to come". [ID:nL691330]
In comments published on Monday, however, Chinese officials said the financial crisis had laid bare defects in the dollar-led global economy and the world should look to displace the U.S. currency, even if it takes many years. [ID:nPEK337501] (Additional reporting by Naomi Tajitsu in London, Editing by Chizu Nomiyama)