* Yen rises to multi-month highs against dollar, euro
* Commodity currencies hit hard on China worries
* Australia's trade data next up in quiet Asia calendar
By Ian Chua
SYDNEY, Jan 7 (Reuters) - The yen hovered at multi-month highs against its peers early on Thursday after investors snapped up the safe-haven currency as global uncertainty sapped risk appetite.
Worries about the health of the Chinese economy coupled with heightened geopolitical tensions in the Middle East and the Korean Peninsula have investors on the defensive.
The dollar fetched 118.57 yen JPY= , having dropped as deeply as 118.25 overnight, a level last seen in mid-October. The euro hit a near nine-month low just shy of 127.00 yen EURJPY=R before pulling back to 127.78.
Against the greenback, the common currency bounced towards $1.0800 EUR= after investors saw a slightly dovish slant in minutes of the Federal Reserve's December meeting. It was last at $1.0778.
The minutes showed some policymakers expressing concerns inflation could get stuck at dangerously low levels even as they decided to raise interest rates. Reserve Vice Chairman Stanley Fischer said four rate hikes this year is close to his expectations, but added that global uncertainty could still upset this scenario.
currencies were hit hard amid renewed fears about China and a steep drop in oil prices. The Australian dollar, often used as a liquid proxy for China plays, fell to a two-month low of $0.7048, having shed more than two U.S. cents in the first full trading week of 2016.
The Aussie skidded to a three-month low of 83.47 yen. Likewise, its New Zealand peer plumbed a one-month low of $0.6626 NZD=D4 and a three-month trough of 78.43 yen.
Australia's trade and building approvals data due at 0030 GMT could provide some distraction for the market, though China worries and geopolitical tensions will continue to be the key drivers.
Traders said the attention will remain focused on China's financial markets, particularly the yuan which on Wednesday weakened to its lowest level since March 2011.
"The market saw the PBoC's move as an increasing tolerance of China's government to use depreciation of its currency as a policy tool to support economic growth," noted analysts at National Australia Bank.
"The move triggered a downward movement in Asian currencies, with the NZD and AUD swept away for the ride."