* Yen, dollar rise broadly as investors seek safety
* Sterling tumbles as some BoE members wanted bigger QE
* Chinese shares fall 4.3 percent, unnerving investors (Updates prices, adds quote, detail)
By Steven C. Johnson
NEW YORK, Aug 19 (Reuters) - The yen rose on Wednesday as a sharp slide in China's stock market added to worries about the world economy and increased the Japanese currency's safe-haven appeal.
Those concerns were tempered, however, after Wall Street suffered only modest losses and a fall in U.S. crude stockpiles drove the price of oil higher, helping the euro trim losses against the yen and lifting it to a session peak above $1.42.
With no major economic news due, traders said the currency market was taking its cue largely from stocks.
"Negative sentiment hasn't disappeared but it has abated, with both the S&P <.SPX> and Dow <.DJI> paring losses," said Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto. "That gave the market a chance to push the euro higher."
He said the euro's gain against the dollar suggests an earlier dip below $1.41 triggered strong buying interest.
The dollar hit a one-month low against the yen and was last
down 0.8 percent at 93.94 yen
Investors initially cut exposure to higher-yielding assets and currencies considered more dependent on strong global growth, such as the Australian dollar, after a 4.3 percent plunge in the Shanghai Composite Index. [ID:nBJD001077]
The yen and dollar typically gain when equities fall because investors buy them either as safe-havens or they unwind trades that were financed by borrowing the two currencies.
Sterling also cut early losses, suffered after minutes from the Bank of England's last meeting showed some board members, including Governor Mervyn King, wanted an even bigger expansion in the bank's financial asset purchasing program. [ID:nBOE002011]
The pound was last down 0.4 percent at $1.6495
Asset purchases require the BoE to print money, which some investors fear may lead to an oversupply of sterling and eventual inflation.
Still, analysts said the market mood was tentative. Strauss said he expects the yen to remain well bid and the dollar to resume gains against the euro in the near-term as investors grow weary of pushing stocks higher.
The Shanghai stock market's 4 percent plunge, which puts it down 20 percent in two weeks, is "setting a very bad tone indeed for the rest of the global markets," said independent investor Dennis Gartman, author of The Gartman Letter.
"Confidence in the outlook may not be so readily found among investors as was so clearly the case in the first half," added Neil Mellor, currency strategist at Bank of New York Mellon. (Additional reporting by Jessica Mortimer in London; Editing by Dan Grebler)