* Yen rebounds as investors look for safety
* Norway's crown falls after Norges bank flags uncertainty
* Aussie rises on employment data
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Adds details, quotes, latest prices)
By Tommy Wilkes
LONDON, Aug 15 (Reuters) - The yen strengthened again on
Thursday as signals from the bond market that the U.S. economy
could be headed for a recession unnerved investors.
Foreign exchange markets have remained relatively calm
despite big moves in bond markets this week, where investors
have piled into government debt in anticipation of a global
growth slowdown.
But the safe-haven Japanese yen has strengthened as
investors looked for safety.
After initially falling in early trading on Thursday, the
currency was back in demand as European stock markets fell and
investors flooded into safer assets.
The latest turbulence in financial markets was triggered by
an inversion in the U.S. Treasury yield curve US2US10=TWEB for
the first time in 12 years.
The closely watched inversion, where two-year yields trade
higher than 10-year yields, has historically preceded previous
economic recessions.
"Market-related headlines this morning have been dominated
by yield curve inversion and the recessionary implications that
follow," Rabobank said in a note to clients.
Sentiment was already fragile after economic data from China
and Germany earlier in the week revealed the extent of the
damage the China-U.S. trade dispute is causing to the world
economy.
The yen, down 0.3% at the start of the London trading
session, was last up 0.1% at 105.85 JPY=EBS .
On Wednesday, the yen rallied 0.8% versus the greenback, its
biggest daily gain in two weeks.
The dollar index .DXY , which measures its value against a
basket of six major currencies, fell 0.1% to 97.853, unchanged
on the day.
The euro edged higher against the dollar, rising 0.2% to
$1.1155 EUR=EBS .
NORWAY 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 hike
rates while most policymakers turn more dovish in the face of
worsening global growth.
"We regard this as a signal that Norges Bank wants to gain
flexibility in order to evaluate important incoming domestic
data and global developments before deciding on the next
possible rate hike," said SEB strategist Erica Blomgren Dalstø.
The crown was last down 0.2% against the euro at 10.022
crowns EURNOK=D3 . The Australian dollar AUD=D3 rose as much as 0.5% to
$0.6791 after data showed the Australian economy added a
forecast-busting 41,100 new jobs in July.
However, reflecting the rising global economic risks,
futures markets still imply an 84% chance of a quarter point
rate cut to 0.75% in October, with November seen better than
100%.
Reserve Bank of Australia Deputy Governor Guy Debelle also
highlighted the risks from the trade war in a speech earlier on
Thursday, saying it could trigger a self-fulfilling global
downturn. Sterling edged higher, hitting $1.2101, up 0.4% on the day
GBP=D3 as better-than-expected retail sales data for July
supported the pound.
(Editing by Angus MacSwan and Hugh Lawson)