TOKYO (AFP) - Currency traders dumped the US dollar on Monday (Aug 24) on the back of a global equities rout, as fears about China and the global economy hammered sentiment and sent investors fleeing into safer investments.

The US dollar was also hit as expectations disappeared for an imminent US interest rate hike.

The greenback dropped to 121.19 yen from 122.06 in New York on Friday and sharply down from above 124 yen on Thursday in Asia.

The euro rose to US$1.1451 from US$1.1386, while it weakened to 138.77 yen from 138.97 yen in US trade.

Jitters over China and the global economy saw traders move into the yen - a safe haven in times of turmoil and uncertainty - as stocks markets around the world plunge.

On Monday, Shanghai shares tumbled more than eight per cent in the morning, while Tokyo's benchmark stock index dropped 3.21 per cent by the break.

Investor fears have spiked on concerns the world's second-biggest economy is slowing more than previously thought after China's central bank devalued the yuan in a shock move seen as a bid to boost sagging exports.

On Friday, China reported weak manufacturing data, fuelling concerns among investors over the clouding outlook for the world economy.

"The yen and euro are benefiting from both emerging-market risk aversion caused by China's surprise move this month on the yuan and from falling expectations that the Fed will hike interest rates," Mansoor Mohi-uddin, senior markets strategist in Asia at Royal Bank of Scotland, told Bloomberg News.

Minutes from the Federal Reserve's July meeting last week revealed policymakers want to see further improvement in the labour market and inflation before raising interest rates for the first time in nearly nine years.

Investors eye revised US economic growth data which will be released this week as a fresh sign for the timing for an interest rate hike.