TOKYO, June 25 (Reuters) - The yen rose broadly and stayed near a 1-month high against the dollar on Friday on short covering, and as falls in regional share markets prompted traders to further sell risky currencies such as the Australian dollar.

The euro and Australian dollar fell against the greenback on investor doubts about the strength of a global recovery, and were also dragged lower by their weakness against the yen.

The yen and dollar were also supported by concerns that leaders of the Group of Eight and Group of 20 rich and developing nations may not produce a strong and unified response to help the economic recovery at their weekend meetings in Canada.

It's all about cutting risky positions with falls in yen crosses leading the market, said a trader for a Japanese trust bank.

Traders said quarter-end inflows were lending support to the yen JPY=, with Japanese exporters selling the euro.

Dollar/yen options barriers at 89 yen and below are likely to check gains for the Japanese currency in the near-term but some traders said momentum indicated the yen would eventually test 87.95 yen, a high hit on May 6.

Traders said many investors who had gone short on the yen this month on speculation that Japan's new Prime Minister Naoto Kan will support a weaker yen were unwinding those positions.

Also helping the yen was the Federal Reserve's dovish statement this week, which contributed to a further fall in already low Treasury yields.

The dollar stood at 89.52 yen JPY=, down 0.1 percent from late U.S trade on Thursday, when it lost about 0.4 percent and hit a 1-month low of 89.22 yen on trading platform EBS.

Japanese exporters are expected to move quickly to sell the dollar early on Monday if dollar/yen finishes Friday trade below 90.00 yen as they have to convert overseas earnings towards the end of the month, traders said.

The dollar index was flat on the day at 85.77 .DXY, with traders expecting it to test support at 85.09, this week's low, in the near term as softer Treasury yields keep it on the defensive.

U.S. economic reports on weekly initial jobless claims and durable goods orders for May on Thursday were relatively firm yet could not lighten the market gloom.

The euro fell 0.1 percent to $1.2320 EUR=, giving up some gains made on Thursday when quarter-end buying by portfolio managers helped the currency despite worries about the euro zone's debt and financial sector.

Gains in the euro were likely to be checked by losses in stock markets, with the currency remaining highly correlated with the S&P 500 index .SPX at a solid 63 percent.

S&P 500 stock futures SPc1 inched up 0.3 percent on Friday in Asia, while Tokyo's Nikkei stock average .N225 dropped 2 percent, prompting investors to feel more nervous about taking on risk.

Against the Japanese currency, the euro fell 0.2 percent to 110.27 yen EURJPY=R after falling as low as 110.04 yen on EBS.

The Australian dollar slid 0.5 percent to $0.8625 AUD=D4, having lost 0.9 percent on Thursday as investors booked profits in high-yielding currencies after a rally this week.

Uncertainty over Australia's mining tax after remarks from the country's new Prime Minister Julia Gillard was also seen as a negative for the currency, traders said.

Gillard said she was open to genuine negotiations with global miners over the government's planned mining-profits tax, but declined comment on the 40-percent headline rate.

Some market players hope a change of leadership would lead to a softening in policy on the 40-percent proposed mining tax.

China's central bank set the yuan's daily mid-point CNY=SAEC at 6.7896 par dollar on Friday, the highest level since the July 2005 revaluation. It meant China has allowed its reference rate to rise 0.6 percent this week since it announced a change in the yuan exchange regime at the weekend.

The euro and the Australian initially edged up on the news then quickly gave back gains. (Additional reporting by Anirban Nag in Sydney and Satomi Noguchi in Tokyo; Editing by Edwina Gibbs)