* Currency markets in risk-off mode on China growth worries
* Yen hits six-week high vs USD, two-year high on Aussie
* Euro climbs to two-month high vs USD
* Aussie under broad pressure
By Ian Chua and Hideyuki Sano
SYDNEY, Aug 24 (Reuters) - The euro hit a 6 1/2-month high and the yen hit a 1 1/2-month high against the dollar on Monday as investors dumped risk assets and flocked to currencies often seen as safe havens.
The euro and the yen rose also as investors unwound their short positions.
"Markets are panicking. Things are starting look like the Asian financial crisis in the late 1990s. Speculators are selling assets that seem the most vulnerable," said Takako Masai, the head of research at Shinsei Bank in Tokyo.
Worries about a slowing Chinese economy, and in turn global growth, flared up last Friday after a survey showed a further deterioration in China's manufacturing activity.
This was compounded by a steep drop in the Chinese share market, which fell more than 7 percent on Monday.
The euro jumped to as high as $1.1496 EUR= , its highest level since February. It last stood at $1.1480, up 0.9 percent on the day.
The dollar slid as far as 120.73 yen JPY= , down more than a full yen from 121.96 late in New York on Friday, reaching a low last seen on July 9.
"Yen-carried trades and euro-carried trades are all being wound back," said Yasuaki Amatatsu, senior currency analyst at the Bank of Tokyo-Mitsubishi UFJ.
A break of the yen's July low of 120.41 will mean a formation of double-top chart pattern, which could open the way for a test of January low of 115.85, said Shinsei Bank's Masai.
Traders said weakness in the greenback also reflected doubts that the Federal Reserve will be able to hike interest rates next month.
Many traders now think it is almost impossible for the Fed to raise rates in September, given signs of stress in global financial markets.
"'Risk off' remains the dominant theme of currency markets, with JPY and EUR expected to continue to strengthen. Should the higher volatility persist, the AUD and NZD should start to markedly under-perform more," analysts at ANZ wrote in a note to clients.
The Aussie, often used as a liquid proxy for China plays, fell to a six-year low of $0.7201.