* Dollar boosted as risk sentiment worsens
* Euro falls to lowest since July 2017
* Yen seen drawing safe-haven bids
By Tom Finn
LONDON, Aug 10 (Reuters) - The euro sank to its lowestlevels in more than a year on Friday after a report that theEuropean Central Bank (ECB) was growing concerned about theexposure of banks to a dramatic slide in the Turkish lira.
The plummeting lira, caused by a deepening rift with theUnited States and worries about Turkey's economy has sentripples across markets. Investors jumped into the safe-havendollar, yen, and Swiss franc and sold emerging marketcurrencies.
The euro was hit hard after the Financial Times reported onFriday, citing two sources, that the ECB had concerns aboutbanks in Spain, Italy and France and their exposure to Turkey'swoes. urn:newsml:reuters.com:*:nL5N1V124H
Traders said that had pulled the euro down against thedollar and other currencies including the Swiss franc.
The Turkish lira's TRYTOM=D3 slump has bred concern aboutinvestor exposure to Turkey and in particular whetheroverleveraged companies would be able to pay back hard currencyloans after years of borrowing in euro and dollars.
"Markets are waiting for a Turkish response to the FXcrisis, and hoping for more credible monetary policy as well asdiplomatic overtures," said Societe Generale strategist KitJuckes.
"The longer the market waits, the more contagious the crisiscan be, not just to emerging market assets but to developedmarket ones. The Swiss franc, yen, and dollar are the only‘safe' currencies in the very short term," he said.
The euro fell 0.6 percent to $1.1432EUR=EBS , its weakestsince July 2017. Against the yen, the euro slid 1 percent to126.79 yen, a two-month low. EURJPY=EBS
"We now have the first signs of the EUR/USD rate plungingthrough key support on fears over the impact of the turmoil inTurkey on the European banking sector," said analysts at MUFG.
The euro is down almost 1 percent for the week, partlybecause of investor concerns that Italy is heading for a costlyand unsustainable spending spree.
The dollar jumped to a 13-month high .DXY against a basketof currencies, climbing more than 0.6 percent to 96.172. TheJapanese yen JPY= and Swiss franc EURCHF= rose.
The flight from risky assets heaped pressure oncommodity-linked currencies including the Australian dollar,which fell one percent to $0.7280, an 18-month low. AUD=D3
"Risk aversion is taking control again, putting pressure onemerging market currencies while letting the safe haven dollarand the Swiss franc appreciate," said Antje Praefcke, a currencystrategist at Commerzbank in Frankfurt.
Global foreign exchange markets this summer have beendominated by political angst, from U.S. sanctions on Russia andTurkey, to rising tensions in the Middle East and in Europe.
The rouble RUBUTSTN=MCX retreated overnight to its lowestsince November 2016, weakening beyond the psychologicallyimportant 65-per-dollar threshold.
Russia said on Friday it would consider it an economic warif the United States imposed a ban on banks or a particularcurrency. urn:newsml:reuters.com:*:nL5N1V10P0
The British pound continued to slide. GBP=D3 It has fallenthis week as investors increase bets on a "hard" Brexit.
U.S. consumer price inflation data for July due on Friday isexpected to show inflation increased 0.2 percent, after rising0.1 percent in June. (Editing by Matthew Mpoke Bigg) ((firstname.lastname@example.org; +44 2075427508 ; Reuters Messaging:email@example.com))