GLOBAL MARKETS - Dollar crawls higher, Japan shares hit by yen

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HONG KONG (Reuters) - The dollar crawled up on Monday from a one-year low against other currencies as speculators booked profits on bets against the greenback, while the yen's surge threatened Japanese exporters and drove Tokyo shares down.

European indexes were set for a weaker start, with futures on the Dow Jones Euro Stoxx 50 down 1.2 percent in early trade.

U.S. crude oil dropped about $1 a barrel to near $68 and gold prices dipped on the dollar's slight gains, even as investors remained nervous that the rise was only a brief respite in a deeper slide. Copper prices also retreated.

Some analysts said Washington's decision to slap duties on Chinese tyre imports spooked investors, though others said there was limited impact. China condemned the move as protectionist.

The rebound in global stocks has prompted many portfolio managers to pull funds out of safe-haven dollar funds and shift it into equities, while the surge in gold has revived worries of consumer price inflation as a result of the Federal Reserve's ultra-loose policy.

Japan's Nikkei average shed 2.3 percent as investors are fretting about how the yen's surge against the dollar will hurt exporters still reeling from the currency's record surge last year. A rising yen erodes the value of the earnings exporters make abroad.

"Japan will be hit by the stronger yen," said Masayoshi Yano, senior market analyst at Meiwa Securities in Tokyo.

Japanese exporters are likely to feel the pain of a stronger yen at levels below 95 to the dollar. The 95 level was roughly the average rate seen by large exporters in the Bank of Japan's last quarterly tankan survey for the business year to March.

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