* Dollar/yen touches 2-week low, Aussie also sags * Dollar cautious after choppy session on Friday * Swedish crown weak after industrial data (Updates prices, adds comment) By Anirban Nag LONDON, May 5 (Reuters) - The yen rose to a two-week high against the dollar on Monday after a survey showed China's manufacturing activity contracted for a fourth straight month, bolstering the safe-haven Japanese currency.
In Europe, the biggest mover was the Swedish crown, which lost ground after a report showed industrial production weakening. That puts pressure on the Riksbank to cut rates when it meets next in July.
The focus was on the dollar, though. An encouraging report on U.S. payrolls numbers on Friday initially boosted the dollar, but it erased those gains as investors focussed on less promising labour force and wages data. The crisis in Ukraine also took a toll.
The dollar lost further ground against the yen after a private survey showed China's manufacturing activity remained weak in April, adding to signs that the world's second-largest economy is losing momentum.
The greenback fell as low as 101.86 yen, its weakest since April 17 and down more than 1 yen from Friday's near one-month high of 103.025 yen on trading platform EBS. It was last trading at 101.98, down 0.2 percent on the day, with volumes low on the Reuters Matching system.
Volumes are likely to be thin this week, with Japanese markets closed on Monday and Tuesday for public holidays. Banks in London, the biggest market, were shut on Monday.
RISK AVERSION "There is risk aversion that is keeping the yen supported," said Niels Christensen, FX strategist at Nordea, Copenhagen. "Also, the dollar has been weighed down by the U.S. data, which shows wages are not growing fast enough to trigger worries about inflation. As a result, tightening by the Fed is some way off, and that is not helping U.S. yields." U.S. employers hired workers at the fastest rate in more than two years in April. But the number of people dropping out of the labour force increased and wage growth was.
Further undermining the dollar was a drop in U.S. Treasury yields, particularly at the long end. The benchmark ten-year yield plumbed a three-month low of 2.57 percent and was last at 2.575 percent.
The dollar will probably stay on the defensive against the yen in the near term, especially since market positioning is still probably tilted toward favourable dollar bets, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
The yen rose broadly, with the euro shedding 0.2 percent to 141.55 yen, and the Australian dollar 0.2 percent to 94.64 yen.
The euro was steady at $1.3873, holding above Friday's intraday low of $1.3812. With the European Central Bank likely to keep rates unchanged on Thursday after inflation climbed in April, investors could push the euro towards $1.39/1.3950 in the latter part of the week.
"The $1.40 mark is a level where the euro should top out," Nordea's Christensen said.
The euro rose against the Swedish crown after dismal data from Sweden. It rose to 9.0860 crowns on a report that Swedish industrial production fell 3.8 percent in March, making a sharp slowdown and a cut in interest rates more likely.
(Additional reporting by Masayuki Kitano in SINGAPORE; Editing by Larry)