* Yen, dollar climb; swine flu concerns boost risk aversion
* Dlr hits 1-mth low vs yen as European shares fall 1.2 pct
* Euro slides 0.8 pct vs dlr; higher risk Aussie, kiwi fall
* Mexican peso falls 3 percent vs dollar, hits 3-week low
(Adds comment, updates prices, changes byline)
By Jessica Mortimer
LONDON, April 27 (Reuters) - The yen strengthened broadly on Monday as concerns that an outbreak of swine flu in Mexico may spread into a global pandemic sent investors seeking currencies perceived as safe havens, while the Mexican peso fell sharply.
The flight to safety also boosted the dollar against currencies other than the yen, and dented currencies seen as higher risk such as the Australian and New Zealand dollars.
European shares fell 1.2 percent as investors feared a flu pandemic could snap a nascent global economic recovery, sending the yen -- which typically gains during heightened risk aversion -- to a one-month high versus the dollar.
The Mexican peso fell around 3 percent versus the dollar after more than 100 people were confirmed to have died in Mexico from the swine flu virus, which has spread across North America and as far as New Zealand..
The euro fell against the dollar, erasing most of Friday's gains which came after the closely-watched German Ifo survey showed business confidence improving more than expected, which boosted hopes that the euro zone economy may be over the worst.
"Investors are taking some risk off the table, which is helping safe haven currencies like the yen and the dollar," BTM-UFJ currency economist Lee Hardman said.
"It is still highly uncertain what the outcome will be. If it does turn into a pandemic it couldn't have come at a worse time," he said.
At 1142 GMT, the dollar fell 0.6 percent against the yen to 96.58 yen, close to an earlier one-month low around 96.48 yen, while the euro lost 1.3 percent to 126.91 yen.
Against the dollar, the euro fell 0.8 percent to $1.3141. The single currency had gained around 1.5 percent last week following a string of improved euro zone economic data.
The Mexican peso traded at around 13.7300 per dollar, after earlier hitting a 3-week low around 13.7410. The pair was down around 3 percent on the day, having ended at 13.284 pesos on Friday, according to the central bank's final reference.
Heightened risk aversion on concerns that the flu may turn into a pandemic stung the higher-yielding Australian and New Zealand dollars, which were each down around 1.2 percent against the U.S. dollar.
The New Zealand currency was also under selling pressure because its central bank is expected to cut benchmark interest rates to a record low of 2.5 percent this week and signal no rise for a while.
Analysts noted, however, that the intense risk aversion may have been overdone and could fade, as long as there is no more news of the flu outbreak spreading.
"To some extent the reaction has been overdone," said Lauren Rosborough, senior currency strategist at Westpac Institutional Bank in London.
"Unless it comes out that this has become a pandemic, I would imagine the market will fade any rally in the dollar."
ECB AWAITED
Aside from the flu concerns, analysts said market participants were looking ahead to the European Central Bank's policy meeting on May 7.
The central bank is widely seen cutting its key interest rate to 1 percent from 1.25 percent, and investors are watching to see whether it will outline possible quantitative easing measures to help boost the economy.
ECB Governing Council member Nout Wellink was quoted in the media as saying that the central bank should discuss lowering rates below 1 percent, while another member, Axel Weber, was quoted separately as saying that a cut to 1 percent was appropriate..
This week, U.S. first quarter gross domestic product data on Wednesday will be closely eyed, while markets were also wary ahead of a U.S. policy meeting on the same day.
A small majority of economists polled by Reuters felt the Federal Reserve is likely to increase its Treasury purchase programme from the current $300 billion.
News from a meeting of world finance leaders in Washington at the weekend was overshadowed by the swine flu concerns.
The finance leaders agreed there was a "break in the clouds" of the economic storm but said more measures were needed to ensure an end to the global recession.. (Reporting by Jessica Mortimer; additional reporting by Naomi Tajitsu; Editing by Toby Chopra)