* U.S. retail sales data boosts greenback
* Norway's crown falls after Norges Bank flags uncertainty
* Aussie rises on employment data
By Tommy Wilkes
LONDON, Aug 15 (Reuters) - The dollar rebounded and roseagainst the yen on Thursday as better-than-expected retail salesdata in the United States helped offset fears that the U.S.economy could be headed for a recession.
Foreign exchange markets have remained relatively calmdespite big moves in bond markets this week, where investorshave piled into government debt in anticipation of a globalgrowth slowdown.
But the safe-haven Japanese yen has strengthened asinvestors looked for safety.
After earlier rising as European stock markets fell andinvestors flooded into safer assets, the yen then weakened. Datashowing a bigger-than-expected rise in retail sales in Julyboosted the dollar. urn:newsml:reuters.com:*:nLNSFJEF8Y
The latest turbulence in financial markets was triggered bythe first inversion in the U.S. Treasury yield curve US2US10=TWEB for 12 years.
Such an inversion, where two-year yields trade higher than10-year yields, has preceded previous economic recessions.
"Market-related headlines this morning have been dominatedby yield curve inversion and the recessionary implications thatfollow," Rabobank said in a note to clients.
Sentiment was already fragile after economic data from Chinaand Germany earlier in the week revealed the extent of thedamage the China-U.S. trade dispute is causing to the worldeconomy.
The dollar rose 0.3% against the yen to 106.19 JPY=EBS .
On Wednesday, the yen had rallied 0.8% against thegreenback, its biggest daily gain in two weeks.
The dollar index .DXY , which measures its value against abasket of six major currencies, erased its earlier losses andwas last at 97.949, unchanged on the day.
The euro edged higher against the dollar, rising 0.1% to$1.1145 EUR=EBS .
The euro was also ahead against the Swiss franc, rising 0.2%to 1.0863 francs per euro EURCHF=EBS .
NORWAY'S CROWN FALLS
Elsewhere, Norway's crown weakened after its central bank,the Norges Bank, said its policy outlook was now more uncertain,raising doubts about whether it would raise rates later in 2019.
The central bank has been an outlier with its plans to hikerates while most policymakers turn more dovish in the face ofworsening global growth.
"We regard this as a signal that Norges Bank wants to gainflexibility in order to evaluate important incoming domesticdata and global developments before deciding on the nextpossible rate hike," said SEB strategist Erica Blomgren Dalstø.
The crown was last down 0.1% against the euro at 10.019crowns EURNOK=D3 . urn:newsml:reuters.com:*:nL8N25B1Q4urn:newsml:reuters.com:*:nAPN04IXVT
The Australian dollar AUD=D3 rose as much as 0.5% to$0.6791 after data showed the Australian economy had added aforecast-busting 41,100 new jobs in July.
However, reflecting the rising global economic risks,futures markets still imply an 84% chance of a quarter-pointrate cut to 0.75% in October, with a cut by November seen ascertain.
Reserve Bank of Australia Deputy Governor Guy Debellehighlighted the risks from the trade war in a speech onThursday, saying it could trigger a self-fulfilling globaldownturn. urn:newsml:reuters.com:*:nS9N23B01A
Sterling rallied to $1.2122, up 0.5% on the day GBP=D3 , onbetter-than-expected retail sales data for July and hopes that ano-deal Brexit can be avoided. (Editing by Angus MacSwan, Hugh Lawson and Kevin Liffey) ((email@example.com))