RTRS :Yen up as investors book profits on recovery trades
* Yen extends gains, Japanese exporters sell dollars
* Euro, sterling, Aussie all fall vs yen
* Shanghai shares drop 3.5 pct, extending last week's slide
* Profit-taking as stocks fall, nerves about recovery
By Charlotte Cooper
TOKYO, Aug 17 (Reuters) - The yen rose on Monday, hitting its highest in more than two weeks against the euro, as weak U.S. consumer morale clouded the outlook for a quick global recovery and spurred profit-taking in commodity-linked currencies.
The Australian and New Zealand dollars shed about 1 percent against the Japanese currency and the U.S. dollar, extending a fall which began on Friday and saw them stumble from their latest 2009 highs against the greenback.
Both currencies have been popular with investors betting they will be among the first to benefit from economic recovery and they have rallied in tandem with stock and commodity markets.
But Asian share markets were down Monday, with the Shanghai Composite index .SSEC sliding more than 4 percent and extending last week's 6.6 percent drop.
Falls were broad-based, with oil prices also falling below $67 a barrel CLc1 and extending Friday's 4.3 percent decline as investors continued to book profits from recent gains in risk assets.
Analysts said investors will likely continue cutting long positions in risky assets and buy the yen and the dollar back if other emerging markets which have been trading firmly start falling together with the slide in Chinese stocks.
Indian shares shed more than 2 percent .BSESN, while the South Korean stock market lost 2.7 percent .
"In the long run, buying of risky assets with economic recovery hopes will likely to continue. But a short-term correction of those trades looks set to stay for this week or a few more weeks, pushing the dollar and yen up and cross/yen down," said a currency analyst for a U.S. bank.
Consumer confidence fell in August for the second straight month and revived concern about the U.S. economic turnaround. [ID:nN14304812].
"Weak data is no longer treated as a harbinger of an economic apocalypse, but as an indication that the forthcoming period of growth is likely to be frustratingly tepid relative to the rich valuations of risk-sensitive asset markets," said David Watt, a senior currency strategist at RBC Capital Markets.
The dollar also fell against the yen but its losses were mild after a half-yen fall on Friday, and it was up on the day against the euro. Continued...
