* Currency markets in risk-off mode on China growth worries
* Low-yielding euro, yen up on unwinding of carry trades
* Commodity currencies hit by China demand worries
By Ian Chua and Hideyuki Sano
SYDNEY/TOKYO, 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 on fears about a slowdown in the Chinese economy.
The Australian dollar tanked to six-year lows and many emerging market currencies plunged on worries about foreign capital outflows after Chinese shares tumbled more than 8 percent.
"Markets are panicking. Things are starting look like the Asian financial crisis in the late 1990s." said Takako Masai, the head of research at Shinsei Bank in Tokyo. "Speculators are selling assets that seem the most vulnerable."
Worries about a slowing Chinese economy, and in turn global growth, engulfed markets after a run on weak economic indicators from China in recent weeks, including Friday's survey showing a further deterioration in China's manufacturing activity.
"Many people feel they just can't tell what is going on in China. Officially growth is said to be 6-7 percent. But in reality it could be around 3-4 percent," said Fumio Nakakubo, chief investment officer of UBS's wealth management division in Japan.
The euro jumped to as high as $1.1499 EUR= , its highest level since February. It last stood at $1.1460, up 0.6 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 dollar's July low of 120.41 will mean a formation of double-top chart pattern, which could open the way for a test of the 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, given signs of stress in global financial markets.
Yet, without clear signals from Fed officials, many commodity and emerging market currencies may not be able to stem their fall considering the spectre of higher U.S. interest rates is a major trigger for the emerging markets rout, some market players said.
"In an environment like this, the Fed would usually ease its policy. But so far the Fed hasn't said so, which is amplifying risk for markets," said Tadashi Matsukawa, head of bond investments in Tokyo at PineBridge Investments.
As commodity prices such as oil and copper fell to six-year lows on concerns about slow demand from China, commodity currencies were the hardest hit.
The Aussie fell to a six-year low of $0.7201 while the Canadian dollar dropped to C$1.3257 to the U.S. dollar, an 11-year low.
The South African rand fell 3 percent to its lowest level since late 2001 while the Malaysian ringgit fell to a low last seen in 1998.