* U.S. Q2 GDP, weekly claims help dlr vs yen
* Yen hits 5-week high vs dollar, climbs vs sterling
* Struggling shares curb risk demand (Updates prices, adds fresh comment, U.S. data, changes byline, dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, Aug 27 (Reuters) - The yen rose across the board on Thursday, hitting its highest in five weeks against the dollar, as a pullback in some overseas stocks raised concerns a risk rally in past months may have been overdone.
The Japanese currency rose, taking its cue from a 0.7 percent fall in Shanghai stocks, which have been a driver of risk trades in past weeks. European shares were flat in general after declining earlier.
The yen is viewed as a safe-haven currency along with the dollar and tends to strengthen when risk appetite tumbles.
A revised report showing the U.S. economy contracted more slowly than expected in the second quarter and weekly jobless claims fell in the latest week helped ease persistent tensions in financial market.
But the overall tone was still one of caution, traders said.
"The market is kind of stuck right now," said Steven Butler, director of foreign exchange trading at Scotia Capital in Toronto. "We did have a move higher in the dollar yesterday, but equities did not follow suit, so in general even though we have this positive data, markets are hesitant to jump back in and make risky trades."
In early New York trading, the dollar traded 0.4 percent lower at 93.84 yen, having fallen as low as 93.38 yen on Reuters trading platform, its lowest since July 22.
The yen rallied across the board, pushing sterling down to 151.40 yen, its lowest since mid-July. It was last at 152.84 yen, down 0.7 percent.
The euro fell 0.5 percent on the day against the Japanese currency to 133.70.
Traders said the yen's gains came as some investors continued to cover short positions, which had knocked down the Japanese currency last week.
Some in the market said a report China's sovereign wealth fund would increase new foreign investment this year by around 10 times from last year and was exploring investment in Japan also supported the yen.
The euro was little changed versus the dollar at $1.4250.
Overall, growing evidence that the U.S. economy is emerging from deep recession heartened investors eager to move into growth-sensitive currencies, such as the Australian and New Zealand dollar.
A report on Thursday showed the U.S. economy shrank at a 1 percent annual rate in the second quarter after tumbling 6.4 percent in the first. The market had expected a 1.5 percent fall in gross domestic product.
"The fear was that we were going to see a negative revision and that did not materialize, and so we had a little bit more of a positive reaction there," said Brian Dolan, chief currency strategist at Forex in Bandmaster, New Jersey.
"The market had been prepared for a negative result and got a positive surprise." (Additional reporting by Wanfeng Zhou in New York and Naomi Tajitsu in London; Editing by Kenneth Barry)