(Repeats to additional subscribers)
* Dollar hits 11-week low vs yen, eases against Swiss franc
* China selloff hits Aussie, other commodity-linked currencies
* Yuan hits weakest offshore since Sept 2011
By Patrick Graham
LONDON, Jan 4 (Reuters) - The dollar sank to an 11-week low against the yen on Monday, hit by a renewed stock market selloff in China that sent traders running for the traditional security of the Japanese currency and the Swiss franc.
Even if a majority of the biggest bank and fund traders expect more strength for the greenback this year, doubts about that have been writ large in a month when it fell almost 5 percent against the euro and almost 3 against the yen.
Another 6-7 percent slide in Shanghai shares was the trigger on Monday, suggesting again that the global economy may struggle to handle many more rises in U.S. interest rates this year - likely to be the central driver for any further dollar rally.
China's yuan currency hit its lowest in more than 4 years in both onshore and offshore trade.
The Australian and New Zealand dollars, which all tend to be dependent on growth and the buoyancy of commodity prices, were also down more than 1 percent.
"All about China really," said the head of foreign exchange at one large London brokerage, asking not to be named.
"Volumes are still not that high but it has been a very interesting start this morning. The weakening of the yuan is getting a lot of attention."
The yen rose 1.2 percent against the dollar to 118.90 yen JPY= , while the franc hit highs of 0.9924 francs per dollar before trimming gains CHF= to around half a percent at 0.9980.
The euro gained half a percent to $1.0907.
The world's biggest trading bank, Citi, recommended buying the yen overnight with a two-week perspective before swiftly recommending clients close out the same trade thanks to the scale of the move against the dollar. The bank remained broadly downbeat on the dollar's prospects ahead of ISM sentiment data later in the day.
"While we doubt that a lasting shift in trend towards weaker data will be seen, there are some immediate risks," strategist Josh O'Byrne said in a morning note to clients.
"Given recent disappointment from regional surveys, there is some risk for dollar losses associated with today's ISM report."
Tension in the Middle East was also playing a role after Saudi Arabia on Sunday severed ties with Iran.
Data showed China's factory activity shrank for the tenth straight month in December, hitting shares across Asia.
China's moves last week to clamp down on play by some foreign banks on the arbitrage between its onshore and offshore currency markets was also read as a sign of concern over the scale of capital outflows.
"There is clearly some kind of shock in this area (the currency market)," said a senior trader with one large Asian bank in London. "But I wouldn't overstate the scale of the action today. My feeling is it may calm down."
The gap between on and offshore rates was still short of a 2 percentage point mark viewed by some in the market as the limit of the People's Bank of China's tolerance. Offshore rates fell by a full percentage point to 6.6324 per dollar.
The onshore yuan - trading for the first time on Monday until mid-afternoon in Europe under another change to market infrastructure - fell 0.6 percent to 6.5338. (Editing by Toby Chopra)