* Aussie among hardest hit on China concerns
* Dollar benefits, nearing 11-mth high on yen
By Ian Chua
SYDNEY, March 21 (Reuters) - The U.S. dollar started with a spring in its step on Wednesday as renewed worries about Chinese growth saw investors dump commodity currencies including the Australian dollar.
The dollar index bounced off a 1-1/2 week trough of 79.354 to last trade at 79.610. Against the yen, the greenback climbed to 83.68, nearing an 11-month high of 84.17 seen just a few days ago.
"We maintain a view of being long USD/JPY on dips as well as CAD/JPY and MXN/JPY. The market continues to want to sell JPY, keeping USD/JPY well bid. Some of it has to do with rising yields in the US," said Sebastien Galy, strategist at Societe Generale.
U.S. Treasury yields have risen on the back of growing optimism about the U.S. economic recovery, making the dollar less attractive as a funding currency for carry trades. In contrast, the low-yielding yen is still seen as an ideal candidate to fund such trades.
Federal Reserve Chairman Ben Bernanke remained cautious about the outlook though, saying while Europe's financial troubles have eased, the U.S. central bank would be ready to act if conditions worsened again.
The firmer dollar knocked the euro to $1.3223, off Monday's high of $1.3264. But commodity currencies suffered most, with the Aussie sliding to $1.0474 from Monday's high of $1.0637. Good support is seen at $1.0414, the 200-day moving average.
The New Zealand dollar also shed more than a full U.S. cent to $0.8167. There was little reaction to data showing the country's current account deficit narrowed in the December quarter.
"With little data on the docket this week from the United States, market participants have been looking for cues from Asia and Europe, and thus far they haven't been sanguine," said Christopher Vecchio, currency analyst at DailyFX.
Indeed, now that Greece has been relegated to the sidelines, investors appeared to have latched onto China, still not convinced it can engineer a soft economic landing.
Comments about slowing Chinese demand for iron ore from the major Australian miners, coupled with yet another hike in energy prices there, seemed to have struck a nerve in markets.
The market is hyper-sensitive to any hint of slowing in China which has been the major driver of global growth and is a big export market from Australia and New Zealand.
There is little in the way of major data in Asia on Wednesday, investors will have to wait until Thursday for HSBC's early report on China's factory activity.