* Dlr/yen slumps to 5-mth low
* Trump says prefers low interest rates
* Trump comments raise wariness over Treasury's currency report
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, April 13 (Reuters) - The dollar skidded to a two-week low against a basket of other currencies on Thursday after U.S. President Donald Trump said that the currency was too strong and that he would prefer interest rates to stay low.
The greenback and U.S. Treasury yields took a heavy hit after Trump told the Wall Street Journal that the dollar was "getting too strong" and would hurt the U.S economy.
The U.S. currency was trading down 0.6 percent by 0715 GMT and on track for its biggest fall in more than three weeks.
Trump's comments broke with a long-standing practice of both U.S. Democratic and Republican administrations of refraining from commenting on policy set by the independent Federal Reserve. It is also unusual for a president to talk about the value of the dollar, a subject usually left to the U.S. Treasury secretary.
The comments were seen by markets as a fresh reminder of the president's protectionist trade rhetoric, which has been a source of concern for dollar bulls.
"This is a dramatic shift in rhetoric from (Trump)," said IronFX analyst Sakis Paraskevov in Cyprus.
"Bearing in mind the administration’s continued verbal intervention in the FX market, we think that any near-term rallies in the dollar could stay relatively limited, despite the Fed raising rates at a moderate pace."
The U.S. currency hit a five-month low of 108.73 in Asian trading but later steadied around 109 yen.
The dollar has shed 2 percent against the yen so far this week, with the safe-haven Japanese currency on a bullish footing because of a rise in geopolitical tensions.
Investors are concerned about the upcoming French presidential election as well as possible U.S. military action against Syria and North Korea and an escalation of tensions with Russia.
That Trump seemed unmoved by the already significant weakening of the dollar against the yen increased nervousness about the U.S. Treasury's semi-annual currency report due Friday, and next week's U.S.-Japan bilateral dialogue.
"It appears that the Trump administration is trying to make up for its internal policy shortcomings with a show of force in external policy, leading to a confrontational stance with trade partners," said Daisuke Karakama, market economist at Mizuho Bank in Tokyo.
"If you are in the forex market it requires a lot of courage to buy the dollar right now."
The euro edged down 0.1 percent to $1.0653, not far from a six-day high of $1.0675 reached overnight.
The dollar was on track for its third straight day of losses against China's yuan, after rising to a one-month high at the start of the week.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Additional reporting by Shinichi Saoshiro in Tokyo; Editing by Hugh Lawson)