* Traders cite worries risk asset rally looking stretched
* Falls in Asian shares and oil prices also give yen a lift
* Eyes on impact of China's plan to curb redundant investment
* Sterling hits 6-week low against the yen
By Masayuki Kitano
TOKYO, Aug 27 (Reuters) - The yen rose broadly on Thursday as investors fretted that a rally in risk assets since March may have run ahead of a recovery in the global economy and on worries about the outlook for Chinese shares.
Market players were keeping an eye on China stocks for direction hints, with currency traders citing worries that China's plans to curb industrial overcapacity may have a negative impact on Chinese equities, at least in the short-term.
The broader concern, however, was that a rally in risk assets such as equities and oil since March may have gone too far, traders said.
Such doubts were lending support to the low-yielding yen, which tends to rise against currencies such as the Australian dollar when the global economic outlook worsens or investor risk appetite declines.
"Markets seem to have already priced in various kinds of good news," said Minoru Shioiri, chief manager of FX trading at Mitsubishi UFJ Securities.
Although the global economy seems to have got past the worst of its troubles, there are concerns about the outlook and how it will fare once various types of economic stimulus wear off, Shioiri said.
The Australian dollar fell 0.4 percent against the yen from late U.S. trading on Wednesday to 77.55 yen, pulling away from a 10-month high of 82.00 yen hit earlier in August.
The dollar dropped 0.5 percent to 93.82 yen, dipping back towards a one-month low of 93.42 yen hit on trading platform EBS last week.
The euro fell 0.5 percent against the yen to 133.70 yen but was steady against the dollar at $1.4251.
Sterling slumped to a six-week low against the yen of 152.12 yen amid the yen's broad rise. After trimming some losses, sterling was down 0.4 percent on the day at 152.34 yen.
Chinese shares, which have fallen sharply over the past several weeks, dipped 0.2 percent, while Tokyo's benchmark stock index was down 1.6 percent on the day.
A dip in crude oil prices was another factor that held back commodity-linked currencies such as the Australian dollar, helping to push them lower against the yen, traders said.
Analysts have said China's equity market now seems to be driven by technical factors, concerns over share supplies and other domestic factors, rather than concerns about China's economic recovery, which is seen as being on track.
But currency traders cited worries that China's plans to curb industrial overcapacity could have a negative impact on Chinese equities, at least in the short-term.
"There is talk that Chinese shares may weaken due to China's efforts to curb such excesses, and so there is an image that cross/yen will be sold," said a trader for major Japanese trading house, speaking before China's stock market opened.
China's cabinet said on Wednesday that it would take steps to curb overcapacity and redundant investment in industries ranging from steel to wind power equipment, the official Xinhua news agency reported. (Reporting by Masayuki Kitano; Editing by Joseph Radford)