Yen slumps, Aussie cheers as China joins stimulus bandwagon

USD

* China cuts required reserve ratio (RRR) of banks by 50 bps

* Move boosts risk appetite, commodity currencies jump

* Euro zone fin ministers expected to approve Greek bailout

By Ian Chua

SYDNEY, Feb 20 (Reuters) - The yen fell to six-month lows on the greenback on Monday, while commodity currencies jumped after China's central bank joined other major counterparts globally in stimulating growth.

The dollar jumped to 79.65, surpassing the October peak around 79.55 scaled after Japanese authorities intervened in markets to weaken their currency. It last stood at 79.62.

China on Saturday cut the amount of cash banks must hold in reserves, boosting lending capacity in a bid to spur the world's second biggest economy.

"While the actual RRR cut was as expected, the PBoC clearly supporting economic growth in the world's second largest economy is positive for the AUD, NZD and risk assets more broadly," said Annette Beacher, head of Asia-Pacific research at TD Securities.

That was a major blow to the safe-haven yen, which was already struggling after Japan's central bank last week surprised markets with its own easing measures. Traders said this has made the yen more attractive as a funding currency in carry trades.

The euro climbed to 105.11 yen, reaching highs not seen since early December, while the Australian dollar hit a 6-1/2 month high of 85.91 yen.

The single currency also firmed against the dollar as make-or-break talks on a 130-billion-euro ($171 billion) bailout for Greece loomed.

Markets are holding on to hopes that euro zone finance ministers will sign off on the rescue package later Monday, helping Greece avert a messy default.

"The stage looks set for an extension of the short covering rally in all things EUR on Monday assuming a Greek deal is confirmed," BNP Paribas analysts wrote in a note.

Data from the Commodity Futures Trading Commission released on Friday showed euro shorts rose in the week ended Feb. 14, suggesting scope for more short covering.

The firmer euro undermined the U.S. dollar, pushing the dollar index down 0.12 percent to 79.235.

But the biggest beneficiaries were commodity currencies like the Australian dollar. The Aussie jumped nearly a full cent from late New York levels to a high of $1.0794, before steadying at $1.0779.

A break above the Feb. 8 high of $1.0845 could open up the way for a re-test of the 29-year peak of $1.1081. The Aussie also rose against the euro, which eased 0.3 percent to A$1.2227.

Japan's trade numbers for January are due at 2350 GMT and analysts polled by Reuters expect a record trade deficit of over 1.4 trillion yen as a strong currency and slowing global growth hit external demand.