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FOREX-Yen soars as investors dump carry trades, flee risk
TOKYO, Sept 5 (Reuters) - The yen surged to a 13-month high against the sliding euro on Friday as investors fled risky positions such as leveraged carry trades, spooked by a sharp fall in stock markets. Escalating worries about global economic growth fed risk aversion among investors and hammered equities, with Japan's Nikkei share average tumbling 3 percent after a sell-off on Wall Street. Market players said investors were bailing out of more leveraged carry trades, or positions funded by borrowing yen at low rates to buy higher yielding currencies and commodities. Traders cited talk of more hedge funds going under after news earlier this week that Ospraie Management LLC, the world's biggest commodities hedge fund, was forced to close its flagship fund this week. 'This is not a flight to quality, it is simply a flight,' said Alan Ruskin, chief international strategist at RBS Greenwich Capital. 'Gold for example has failed to benefit, cash is king -- even the greenback, warts and all, or the yen, zero rates and all.' The sudden downgrade in expectations has forced a wide array of market players to unwind bets that favoured the euro, Australian dollar and commodities. The euro sank to a 13-month low of 150.60 yen before pulling back to 152.40 yen , down 0.7 percent from late U.S. trade. On Thursday, the euro plunged 3.6 percent against the yen -- the biggest one-day drop since the massive carry trade unwind in 1998. The euro dropped 0.4 percent at $1.4270 after sliding to a 10-month low of $1.4212 in frantic late U.S. trade. Even the resurgent dollar succumbed against the yen, hitting a six-week of 105.67 yen and down 0.3 percent on the day at 106.77 yen . 'Everyone it seems is closing out positions,' said a trader at a Japanese trust bank. 'Hedge funds are rapidly unwinding carry trades, and Japanese institutional investors with assets abroad are buying back the yen.' The Australian and New Zealand dollars