Yen rallies on risk aversion

The Japanese yen rallied against the greenback on Tuesday as investors sought the yen's safe-haven status after Chinese equity markets went into free-fall again and manufacturing data from the world's second-biggest economy disappointed.

Manufacturing data out of China added to the risk-off mood in markets, confirming ongoing weakness in China. The China Federation of Logistics and Purchasing manufacturing PMI fell from 50.0 in July to 49.7 in August, it is lowest in three years, where a reading above 50 represents an expansion in manufacturing activity, while a reading below 50 signals a contraction.

Gold, which is also bought in times of instability, rose 0.65% to $1,141.20 per ounce on Tuesday. The US dollar fell 0.36% against the yen to ¥120.77 on Tuesday afternoon in Tokyo as safe-haven demand bid up the yen, sliding from ¥121.21 where the cross closed in New York overnight.

The Shanghai Composite Index fell over 3% to 3,054.586 points shortly after trading began on Tuesday, before rising to 3,172.03 points to be 1.06% lower on the day.