(Updates data, adds quote)
* Dollar falls with oil; less risky currencies gain
* Euro, yen rise vs dollar as investors seek safety
* Canadian dollar down 1 percent
By Dion Rabouin
NEW YORK, Jan 25 (Reuters) - The dollar edged lower on
Monday as renewed selling in oil markets drove investors into
currencies often deemed less risky investments, such as the
euro, Swiss franc and Japanese yen.
Crude oil futures fell 6 percent after Iraq announced
record-high oil production, feeding into a heavily oversupplied
market, and senior officials with the Organization of the
Petroleum Exporting Countries (OPEC) signaled they were unlikely
to reduce crude production unless non-OPEC countries did
likewise.
U.S. stock indexes fell, following their European
counterparts, dragged down by energy stocks.
"Oil recovered (last week) because some people were thinking
that that was the bottom and started to buy back, but after the
(OPEC) comments on Monday, again we're starting to see rapid
decline in oil prices," said Alfonso Esparza, senior currency
strategist at Oanda in Toronto.
Oil had surged on Friday, gaining around 10 percent, in one
of the biggest daily rallies ever.
Monday's oil price fall turned investors' focus back onto a
broadly negative outlook for the world economy that has
dominated since the start of 2016, amid slowing growth in No. 2
economy China and weakness in oil prices.
That outlook has tended to benefit the euro, yen and Swiss
franc at the expense of the dollar.
"The negative shock of the first couple of weeks is still
pretty strong," said Vassili Serebriakov, currency strategist at
BNP Paribas (PA:BNPP) in New York. "The roadmap has been that the yen and
the euro tend to outperform when markets feel jittery."
European Central Bank President Mario Draghi helped
normalize sentiment last week when he suggested the bank could
add to its stimulus program as early as March, Serebriakov
added, "but I think it will take a while before markets find
some sustained stability."
The dollar fell 0.4 percent against the yen to 118.33 yen
JPY= , but was well off last week's one-year low of 115.97 yen.
The euro rose about 0.5 percent to $1.0850 EUR= . The Swiss
franc CHF= rose as the dollar fell 0.3 percent to 1.0129
francs.
The Canadian dollar was the biggest mover among major
currencies, falling 1 percent against the U.S. dollar. Canadian
currency traded at C$1.4261 per U.S. dollar.
"Right now the Canadian dollar and oil are joined at the
hip, so whenever there's a move in oil it's going to drag down
the loonie," Esparza said.