By Alun John
HONG KONG, April 25 (Reuters) - The dollar climbed on Monday as investors sought safety due to uncertainties over the global growth outlook, gaining ground even on the euro despite French President Emmanuel Macron's comfortable election victory over far-right rival Marine Le Pen.
The dollar index rose 0.2% to 101.3 testing last week's two-year peak of 101.33.
"With the French election out of the way the market is starting to focus on other worries. Stock markets are in the red this morning, and that risk aversion has generally benefitted the dollar, and this why the euro has been dragged a bit lower," said Sim Moh Siong, Currency Strategist, at Bank of Singapore.
"There are three big forces driving the markets and all are worries," he said, pointing to fears about whether the U.S. and global economy can withstand an increasingly hawkish Federal Reserve, worries about Chinese growth due to lockdowns to prevent the spread of COVID-19 and the commodity shock caused by the Russia-Ukraine war.
The euro fell 0.29% to $1.0778, after initially opening higher, and is not far from the two-year low of $1.0758 hit last week.
However it gained 0.12% against sterling, touching a one-month peak of 84.32 pence in early trade.
With 97% of votes counted, Macron was on course for a solid 57.4% of the vote, interior ministry figures showed. In his victory speech he acknowledged that many people had only voted for him only to keep Le Pen out, and he promised to address the sense of many French that their living standards were slipping.
Markets had worried that a Le Pen victory, which was not predicted by the polls, would lead to significant economic change in the euro zone's second-largest economy.
"Macron's clear victory is likely to reassure the markets that the European dynamic will continue," said Frederic Leroux, a member of the investment team at Carmignac.
Sterling fell 0.3% against the dollar to $1.28085, a fresh low since September 2020.
The pound has been hurt by last week's weak British retail sales and consumer-confidence data and Bank of England comments that signalled a possible slowdown in the expected upward movement of interest rates.
China's yuan fell to a one-year low on Monday extending losses after posting its worst week since 2015, as investors fret about the worsening economic growth outlook due to strict COVID-19 measures and lockdowns across the country.
The People's Bank of China (PBOC) set the midpoint rate on Monday at 6.4909 per dollar prior to market open, the weakest since August 2021. In the spot market, both the onshore and offshore yuan, touched their weakest since April 2021.
On Monday, Beijing began three rounds of COVID-19 testing for all residents of its biggest district Chaoyang after dozens of cases were reported, prompting people to stock up on food over fears of an eventual strict lockdown akin to that in the financial hub of Shanghai.
"The (Chinese) currency started to weaken last week on the back of lockdowns and the restrained approach to interest rate cuts," said Bank of Singapore's Sim, adding it was not surprising this had affected the Australian dollar. Australia's resource-rich economy is especially tied to Chinese demand.
The Aussie fell 1% to $0.7165, its lowest in a month.
The Hong Kong dollar, which is pegged in a tight band against the U.S. dollar dropped to as low as HK$7.8475 per dollar. It is almost at the HK$7.85 level at which the Hong Kong Monetary Authority will intervene.
Among major currencies, the Japanese yen has been the most affected by rising U.S. interest rates, with Japan keeping its benchmark yields pinned down at ultra-low rates. On Monday morning, the dollar was weaker against the yen at 128.33.
The dollar has gained 11% on the yen so far this year. Last week's 129.4 was the highest for dollar-yen in 20 years.
(Editing by Bradley Perrett and Jacqueline Wong)