* Yen hits 7-week peak vs euro, 1-month high vs dollar
* Swine flu fears cause investors to cut risky bets
* Flu scare seen damaging global economic recovery
* Fiat to own 35 pct of a restructured Chrysler - WSJ
By Satomi Noguchi
TOKYO, April 28 (Reuters) - The yen climbed to a seven-week peak against the euro and a one-month high versus the dollar on Tuesday as concerns about a swine flu outbreak prompted investors to further cut their bets on riskier currencies.
The Australian and New Zealand dollars fell sharply against the yen and the dollar amid uncertainty about the potential impact of the flu outbreak on global trade and consumer confidence.
The Aussie and the Kiwi had benefited over the last few months as the market became hopeful that the global recession had bottomed out.
The flu virus has killed up to 149 people in Mexico, and the World Health Organization moved closer on Monday to declaring it the first flu pandemic in 40 years as more people were infected in the United States and Europe.
The flu scare hurt the Mexican peso, which fell to near a one-month low against the dollar after tumbling the previous day to post its worst performance against the greenback in six months. However, peso trading is limited due to thin liquidity in Asian trade.
"Speculative players are betting on views that worries about the spread of swine flu will damage the global economic recovery after seeing stocks related to travel and commodities hit," said a senior currency trader at a Japanese bank. The euro dropped as low as 125.24 yen on trading platform EBS, its lowest since March 12, down 0.7 percent from late New York trade on Monday.
The dollar slid 0.4 percent to a one-month low of 96.26 yen.
The euro fell 0.2 percent to $1.3013, having rebounded from an earlier low of $1.2996 on buying from Asian accounts, traders said.
Market players said a Wall Street Journal report saying Fiat SpA would eventually own 35 percent of a restructured Chrysler helped to clear some uncertainty about the fate of U.S. automakers and briefly reduced safety buying in the yen.
The news came after shares of General Motors Corp surged on Monday when the troubled automaker announced a restructuring that investors hope will keep the company alive as it tries to secure government funding.
But traders said it was too early to call the overall impact of the WSJ report, and that they were watching U.S. stock futures for near-term direction for the yen and the dollar. U.S. stock futures were down 0.9 percent in Asian trade, giving support to both currencies, traders said.
They added, however, that they were reluctant to place big bets ahead of a series of Japanese public holidays starting on Wednesday.
The euro stayed under selling pressure after tumbling the previous day on European Central Bank governing council member Ewald Nowotny's comments that euro zone rates will stay low for some time and that the central bank is ready to use unconventional policy if needed.
The Australian dollar dipped 1.2 percent to 67.71 yen, its lowest in four weeks. The New Zealand dollar dropped 2.0 percent to 53.43 yen, its lowest since March 23.
The Mexican peso was quoted around 14.02/05 per dollar, according to Reuters data, its lowest since the start of this month. (Editing by Joseph Radford)