* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
LONDON, Aug 18 (Reuters) - The dollar fell more than half a percent against the Japanese yen and was on track for its biggest daily loss in more than week on Friday as risk aversion spread through global markets.
The greenback fell 0.6 percent against the Japanese yen to below 109 per dollar as world stocks were set for a second day of losses and investors fled to the relative safety of government debt and gold.
The single currency crumbled to a six-week low against the yen and was down 0.2 percent on the day at 128.10.
The yen has been a funding currency favorite for leveraged investors betting on a further upside for the euro. It rose more than 7 percent since mid-June to early August, when it peaked at a 1-1/2 year high above 131 per yen. (Reporting by Saikat Chatterjee; editing by Andrew Roche)