* Yen rises on risk aversion, dollar/yen down 0.6 percent
* Euro slides after data shows lower EZ CPI, weak production
* China's GDP disappoints, boosting yen
* JPMorgan earnings results better than expected
By Naomi Tajitsu
LONDON, April 16 (Reuters) - The yen and dollar rose on Thursday after a series of weak economic data around the world scuppered some optimism that the global economy may be starting its recovery, pushing investors toward perceived safer assets.
Gains were capped however, after a better-than-expected earnings report from JPMorgan Chase suggested that U.S. banks were beginning to recover from the financial market meltdown.
The euro fell to a session low after data showing an ongoing fall in euro zone industrial production and a drop in inflation to an all-time low reinforced the view that the euro zone economy is deteriorating and that interest rates may fall more.
"There's a general sense of negative sentiment against the euro and a feeling creeping into the market for green shoots of recovery in other countries and not the euro zone," said Adam Cole, global head of forex strategy at RBC Capital Markets in London.
JPMorgan Chase on Thursday reported a net income of $2.1 billion in the first quarter, or 40 cents per share. That marked a fall, but the figure was higher than expectations for around 30 cents per share.
The bank's announcement followed solid earnings from Goldman Sachs earlier this week.
While the JPMorgan report prompted a slight pullback in risk aversion and helped to boost European shares more than 1 percent at one point, traders were cautious about risky positions, particularly after data showed China's economic growth slowed to its weakest on record.
That came after weak U.S. retail sales and a fall in inflation on Wednesday.
By 1049 GMT, the euro was down 0.5 percent at $1.3161, after falling to a session low of $1.3128 according to Reuters data after figures showed that euro zone industrial production fell 2.3 percent on the month in February.
That was in line with expectations, but production fell 18.4 from a year ago, its biggest drop since records began in 1990. Euro zone inflation in March rose 0.6 percent on the year, the lowest rate since records began in 1996.
Ongoing economic weakness and receding inflation risks raise the prospect of further monetary easing by the European Central Bank, which is widely expected to cut interest rates to 1.0 percent next month, from 1.25 percent at the moment.
Such a move could sting the euro as it would further narrow what remains of the yield differential between the single European currency and those including the U.S. dollar and the yen, whose rates are near zero. Governing Council member Axel Weber said on Wednesday the central bank will lay out a package of "non-standard" measures that will stretch into next year.
Still, he added that he was critical to the idea of cutting rates below 1 percent, and Cole at RBC argued that the view that the ECB remains behind the curve on its rate policy was also keeping the euro under selling pressure.
RISK AVERSION REIGNS
Losses in the euro helped to push sterling down 0.9 percent to $1.4855, after the UK currency had climbed to a three-month high of $1.5069.
The yen gained broadly, pushing the dollar down 0.5 percent to 98.85 yen, while the euro fell around 1.0 percent 130.08 yen .
The dollar rose 0.4 percent against a basket of currencies.
Given their perception as safe-haven currencies, the dollar and the yen tend to benefit during periods of market uncertainty and risk aversion, while the euro, sterling and high yielders including the Australian and New Zealand currencies have fallen.
"Investors are reassessing whether a recent rally in risk assets is sustainable and if a economic recovery is taking place," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ in London.
"When such views are exacerbated to the downside, the yen is perched to move higher," he added.
The yen had fallen earlier in the global session as short-term speculators bought commodity currencies such as the Australian dollar ahead of the China GDP announcement, expecting the figures would outstrip forecasts in a positive signal for the global economy.
But China's annual GDP growth slowed to 6.1 percent in the first quarter from 6.8 percent in the final three months of last year, prompting market players to reverse positions and buy the yen back.
U.S. housing starts data later in the session will also be closely watched.
(Additional reporting by Tamawa Desai; editing by Andy Bruce)