* Dollar hits 11-week low vs yen, eases against Swiss franc
* Disappointing German inflation data knocks euro lower
* Yuan hits weakest offshore since Sept 2011
* Swedish crown slips after Riksbank opens to intervention (Updates market action, changes dateline, previous LONDON)
By Richard Leong
NEW YORK, Jan 4 (Reuters) - The dollar tumbled to an 11-week low against the yen on Monday, as disappointing factory data sparked a steep stock market selloff in China and spurred safe haven demand for the Japanese currency and the Swiss franc.
Renewed worries about the world's second largest economy also hurt the Australian dollar and other currencies whose economies export heavily to China.
"It's a market driven by risk-off sentiment with the sharp drop in equity prices in China," said Vassili Serebriakov, currency strategist at BNP Paribas (PA:BNPP) in New York.
The 7-percent slide in Shanghai shares on Monday suggested 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 four years in both onshore and offshore trade.
Nervousness about the ongoing contraction among the Chinese manufacturers despite Beijing's surprise devaluation in August sent traders to embrace traditional low-risk yen and Swiss franc.
The yen rose 0.9 percent against the dollar to 119.20 yen JPY= , while the franc hit highs of 0.9924 francs per dollar before trimming gains CHF= to around 0.4 percent at 1.0046.
The Australian and New Zealand dollars were down more than 1 percent, while the Canadian dollar shed 0.6 percent at C$1.3920.
On the other hand, the greenback erased earlier losses against the euro after data showed German inflation unexpectedly slowed in December, bringing the annual rate in 2015 to a record low.
The euro EUR= was down 0.4 percent at $1.0814, retreating from a session high of $1.0946.
Among other European currencies, the Swedish crown fell against the euro and dollar after the country's central bank gave its governor the power to intervene immediately to weaken the crown in a bid to stimulate its economy.
It was down 0.5 percent at 8.4918 crown per dollar and 0.1 percent lower at 9.1815 crown per euro.
Most analysts and traders see the dollar resumes its uptrend if the Federal Reserve signals it may tighten again after raising rates in nearly a decade last month.
Friday's U.S. payrolls report if it shows more job gains, would offer more evidence the Fed could raise rates again before mid-year, they said.
"We are on a choppy road heading to Friday's jobs report," said Sebastien Galy, currency strategist at Deutsche Bank (DE:DBKGn) in New York.