* Euro down, yen buoyed as investors take shelter
* Aussie falls before expected hefty rate cut by RBA
* Kiwi hits 8-year low on yen after job market data
By Kaori Kaneko
TOKYO, Feb 2 (Reuters) - The euro fell to its weakest in two months against the dollar on Monday while the yen gained across the board as investors opted for less risky assets on concerns about the deepening global recession.
Worsening labour market data and receding inflation late last week made some in the market reassess the outlook for interest rate cuts in the euro zone, although analysts said the European Central Bank was unlikely to lower rates when it meets this week.
Worries about the faltering global economy also weighed on higher-yielding currencies such as the Australian dollar and the New Zealand dollar, which hit its lowest in eight years against the yen as investors remained risk averse.
"Changing rate expectations is one factor behind the euro's weakness," said Tomoko Fujii, head of Japan economics and strategy at Bank of America.
"The data are all telling us that aggressive rate cuts are probably needed in the next several months -- although not necessarily this week."
Manufacturing purchasing managers' indexes for European countries are due on Monday, with the euro zone index seen improving to 34.5 in January from 33.9 in December, but still well below the 50 level that marks contraction in activity.
"Depending on coming euro zone economic data, the euro will likely be further weighed down," said Shigetake Nakayama, vice president at Bank of Tokyo-Mitsubishi UFJ, in London.
In the United States, the Institute for Supply Management releases its January manufacturing index, with forecasts for a reading of 32.6 versus 32.9 in December.
The dollar firmed, except against the yen, although investors were cautious about pushing it higher as they awaited progress on U.S. plans to clean up debt and recapitalise banks.
The dollar was at 89.37 yen, down about 0.6 percent from late U.S. trade on Friday, when data showed the U.S. economy shrank 3.8 percent in the fourth quarter, its fastest pace in nearly 27 years.
The euro fell 0.5 percent to $1.2750 after dipping as low as $1.2706 on trading platform EBS, the lowest since early December as anxiety about Europe's slumping economy weighed.
It shed 1 percent to 113.94 yen.
The European Central Bank is expected to keep rates on hold at 2 percent when it meets on Thursday but take action in March as both growth and inflation slide to new lows, a Reuters poll showed.
The Aussie fell to a two-month low just below $0.6300 as weak Australian housing data reinforced expectations of a bold rate cut on Tuesday.
Analysts expect the Reserve Bank of Australia to cut its key cash rate by 100 basis points to 3.25 percent, a Reuters poll showed.
The New Zealand dollar fell 1.3 percent to $0.5023 after hitting $0.5016, its latest six-year low, Reuters data showed. It dropped 2.0 percent to 44.83 yen, its weakest since November 2000.
New Zealand wage growth eased from record levels in the fourth quarter, data showed on Monday, leaving the way open for more interest rate cuts. (Additional reporting by Charlotte Cooper, editing by Mike Peacock)