FOREX-Yen and Swiss franc in demand as risk aversion mounts

* Yen and Swiss franc benefits from safety flows

* Euro further weighed by comments from ECB's Draghi

* Focus back on Ukraine as Crimea referendum looms

By Ian Chua

SYDNEY, March 14 (Reuters) - Safe haven currencies like the Swiss franc and yen got off to a flying start on Friday, having surged overnight as tensions in Ukraine flared up and worries about the health of the Chinese economy continued to fester.

Both the U.S. dollar and euro fell around 1.0 percent against the yen to their lowest in over a week with the greenback at 101.83 yen JPY= and the common currency at 141.27 yen EURJPY=R .

Against the Swiss franc, the dollar traded at 0.8745 francs

CHF= , having plumbed a 2-1/2 year low of 0.8698. The euro was at 1.2131 francs EURCHF=R , near a two-week trough around 1.2120 set overnight.

Russia launched new military exercises near its border with Ukraine even as the U.S. warned that serious steps against Moscow will be taken if a referendum planned for Sunday in Ukraine's Crimea region resulted in Russian annexation.

News Search ID:nL6N0MA2ZT News Search ID:nL2N0MA11V

"With the approach of Sunday's referendum in Crimea, reports of Russian troop movements near the Ukraine border and escalating warnings of Western sanctions all contributed to renewed anxiety," analysts at BNP Paribas wrote in a note to clients.

Market sentiment was already fragile after another batch of disappointing Chinese data on Thursday reinforced fears of a slowdown in the world's second biggest economy. News Search ID:nL3N0MA29D

All that prompted investors to take cover in highly-rated government bonds while dumping riskier assets that saw Wall Street .SPX slump more than 1 percent.

The euro was further undermined by comments from European Central Bank President Mario Draghi, who said the strength of the currency was increasingly relevant to the bank's assessment of price stability as it was having a negative impact on inflation.

Speaking at an award ceremony in Vienna, Draghi said the bank has been preparing additional policy steps to guard against deflation taking hold in the euro zone. News Search ID:nF9N0D300V

The euro staged a dramatic reversal on those comments, retreating to $1.3869 EUR= from a 2-1/2 year high of $1.3967.

Commodity currencies, usually sold in times of heightened risk aversion, also came under pressure. That took the shine off

both the Australian and New Zealand dollars.

The antipodean currencies had been star performers on Thursday with the Aussie lifted by surprisingly strong jobs data, while a hike in interest rates at home and talk of more to come gave the kiwi a solid boost. Href="NewsSearch">ID:L3N0MA18A

The Aussie last stood at $0.9034 AUD=D4 , having pulled back from a one-week high of $0.9104, while the kiwi was knocked back to $0.8541 from an 11-month peak of $0.8607.

There is little in the way of key market-moving economic news out of Asia on Friday, leaving the focus on Asian equity markets and Ukraine.

(Ian Chua)

((ian.chua@thomsonreuters.com)(+61 2 9373 1871)(RM: ian.chua.thomsonreuters.com@reuters.net))

Keywords: MARKETS FOREX/