* Dollar sets 3-week high above 106 yen
* China's Q2 GDP, June data suggests economy stabilising
* Yen sags as the Chinese data bolsters risk sentiment (Updates prices, adds comments)
By Masayuki Kitano
TOKYO, July 15 (Reuters) - The yen fell broadly and hit a three-week low versus the dollar after China's second-quarter gross domestic product and June activity data pointed to stabilisation in China's economy and bolstered risk sentiment.
The dollar rose 0.9 percent to 106.27 yen JPY= and touched a high of 106.32 yen at one point, its strongest level since June 24.
For the week, the dollar has jumped 5.6 percent against the yen, putting the greenback on track for its best weekly performance versus the yen since February 1999.
The euro gained 1 percent to 118.33 yen EURJPY=R , while the Australian dollar surged 1.2 percent to 81.29 yen AUDJPY=R .
"There had been some concerns about the (Chinese) economy but the latest numbers show that it's doing alright," said Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo.
Earlier on Friday, the risk-sensitive Australian dollar briefly dipped against the yen AUDJPY=R , following reports that an attacker killed up to 80 people and injured scores when he drove a truck at high speed into a crowd watching Bastille Day fireworks in the French Riviera city of Nice late on Thursday. yen is regarded as a safe haven currency partly because of Japan's net creditor status. As a result, the yen tends to rise in times of market stress, but often comes under pressure when investor risk appetite improves.
China's economy grew 6.7 percent in the second quarter from a year earlier, steady from the first quarter and slightly better than expected. June retail sales and industrial output also exceeded the market's expectations. and analysts say the yen's steep losses this week were partly due to position squaring after the yen rallied recently on safe haven demand after Britain's shock vote to leave the European Union.
The yen has also been pressured by speculation that Japan might adopt more radical stimulus measures.
Such speculation has come to the fore after former Federal Reserve Chairman Ben Bernanke visited the Bank of Japan earlier this week, fuelling talk BOJ Governor Haruhiko Kuroda might provide "helicopter money", which would involve the central bank directly financing government spending.
Government and central bank officials directly involved in policymaking, however, have said there is no chance Japan will resort to "helicopter money". chatter about more aggressive stimulus has put renewed focus on the BOJ policy meeting in late July.
"The market is thinking that the BOJ probably can't afford to stand pat and do nothing at its policy meeting," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
Nevertheless, the dollar will probably have a hard time rising as far as 110 yen based purely on the "helicopter money fantasy", Okagawa said, adding that there are doubts as to whether Japanese authorities can actually resort to such policies.
Sterling gained 1 percent to $1.3474 GBP=D3 , staying firm after the Bank of England (BoE) kept interest rates on hold on Thursday, wrong-footing many investors who had expected a rate cut following Britain's shock vote on June 23 to leave the European Union.