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Weak Chinese data spur safe haven bids for yen

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Scott Barbour | Getty Images

News of deterioration in China's trade balance stoked safe-haven demand for the yen on Tuesday as investors shed holdings of stocks and other risky investments on renewed concerns about a slowing global economy.

Lower oil and industrial metal prices, which had reached multi-month highs in recent days, added pressure on the Canadian and Australian dollars and other commodity-sensitive currencies.

China's exports slumped 25.4 percent in February from a year earlier, the steepest drop since May 2009, while imports dropped 13.8 percent for a 16th consecutive monthly fall.

"If China is in trouble, we are seeing a flight to safety here," said Stan Shipley, strategist at Evercore ISI in New York.

Investors prefer the yen and Swiss franc in times of market volatility and economic worries.

The dollar was down 0.43 percent at 112.59 yen after hitting a one-week low of 112.41. The euro slipped 0.63 percent at 123.89 yen.

The Swiss franc gained before fading in U.S. trading. It was last down 0.1 percent against the greenback at 0.9957 franc and flat at 1.0960 franc per euro.

The Australian and Canadian dollars pulled away from multi-month highs touched on a rally in commodity prices.

The Aussie declined 0.3 percent to $0.7436 after reaching a high not seen since July of $0.7486 on Monday.

The Canadian dollar weakened 0.9 percent to C$1.3421 per U.S. dollar. It had strengthened to C$1.3262 on Monday, its highest since November.

Benchmark Brent crude oil futures hit a three-month high of $41.48 a barrel before turning lower, and were last down 3 percent at $39.61.

Copper retreated further from last week's four-month highs, and closed down 2.6 percent at $4,868.00 a tonne on the London Metal Exchange.

The euro's move was limited ahead of a European Central Bank policy meeting on Thursday, when traders widely expect the bank to embark on more stimulus to support a wobbly euro zone economy.

Investors are uncertain how far it will go. Euro bears are cautious about positioning for bold action, having been badly burned previously when the ECB disappointed by choosing to take more modest easing steps.

The euro was down 0.1 percent at $1.1005, holding in a tight range against the dollar.

Sterling fell 0.33 percent against the dollar to $1.4213 after Bank of England Governor Mark Carney warned a potential exit by Britain from the European Union would hurt the economy and prompt some banks to leave London.