* Regional tensions mount as Pakistan shoots down Indianjets
* Sterling strengthens further on Brexit delay bets
* Euro Zone business climate indicator watched at 1000 GMT
By Tom Finn
LONDON, Feb 27 (Reuters) - The yen and the Swiss francstrengthened on Wednesday after Pakistan shot down two Indianjets, sending investors out of riskier markets into saferhavens.
The Japanese currency rose to a one-week high of 110.38 perdollar after Pakistan downed the jets a day after Indianwarplanes struck inside Pakistan for the first time since a warin 1971.
"So far market reaction in major currencies has beenrelatively limited as tensions between the two countries hadalready been high. Focus is on whether the conflict shows signsof escalating," said Kyosuke Suzuki, director at SocieteGenerale in Tokyo.
Elsewhere, investors watched sterling closely as it headedtowards a four-month high of $1.3288.
The pound rallied on Tuesday after British Prime MinisterTheresa May offered lawmakers the chance to vote on delayingBrexit, opening up the possibility of avoiding a chaotic no-dealdeparture from the European Union.
The dollar remained near a three-week low after shedding 0.4percent overnight on comments from Federal Reserve ChairmanJerome Powell about the central bank's shift to a more "patient"policy approach.
The dollar index against a basket of six major currencieswas flat at 96 .DXY .
"As long as the Fed sticks to its neutral approach there isno monetary policy momentum which would allow EUR-USD to escapefrom the tedious sideways trade of the past months," said EstherMaria Reichelt, an FX strategist at Commerzbank in Frankfurt.
Investors are keeping an eye on the U.S.-North Koreansummit, which begins in Hanoi later on Wednesday.
The euro was down a tad at $1.1376EUR=EBS after hitting athree-week high of $1.1402 overnight.
Traders said they would be watching a euro zone businessclimate survey due out at 1000 GMT for signs of any recovery inthe bloc's recent economic stagnation.
The euro/dollar exchange rate has been helped by a strongerpound recently but will struggle to break above $1.1400, saidChris Tuner, head of currency strategy at ING. (Reporting by Tom FinnEditing by Andrew Heavens)