* Yen rallies to 5-week high vs dollar, climbs vs sterling
* Struggling shares curb risk demand, boost Japan currency
* Spain Q2 GDP revised down, 2nd reading of U.S. GDP awaited
(Updates prices, adds details)
By Naomi Tajitsu
LONDON, Aug 27 (Reuters) - The yen rose broadly on Thursday, hitting its highest level in more than a month against the dollar and sterling as a slide in global stocks raised concerns a risk rally in past months may have been overdone.
The Japanese currency climbed to a five-week high against the dollar as European shares slipped 0.3 percent, taking a cue from a 0.7 percent fall in Shanghai stocks, which have been a driver of risk trades in past weeks.
"Risk sentiment is down. Asia stock markets were softer overnight, and that's resulted in demand for yen," said Kasper Kirkegaard, currency strategist at Danske Bank in Copenhagen.
He added that the yen was being boosted as some traders continued to cover short positions which had knocked down the Japanese currency last week.
Some in the market said a report that China's sovereign wealth fund would increase new foreign investment this year by around 10 times from last year, and was exploring investment in Japan, was also a support factor for the yen.
By 1104 GMT, the dollar traded 0.6 percent lower at 93.65 yen, having fallen as low as 93.37 yen on electronic trading platform EBS, its lowest since July 22.
The yen rallied across the board, pushing sterling down roughly 1 percent on the day to around 151.40 yen, its lowest since mid-July. The euro fell more than half a percent on the day against the Japanese currency.
Despite its losses against the yen, the dollar gained versus the euro, which slipped 0.3 percent to $1.4250. Risk aversion pushed the Australian and New Zealand dollars each down as much as 0.5 percent against the U.S. currency.
Concerns about the global economy were highlighted by a downward revision in Spanish gross domestic product in the second quarter, which showed not all euro zone economies are enjoying the surprising return to growth seen in Germany and France.
Regional German inflation figures showed price pressures picked up in August in five states as the nation's economy improves, but analysts said the possibility of a significant pick-up in inflation risk remained low.
ECONOMY WORRIES REMAIN
Traders awaited a second reading of U.S gross domestic product for the second quarter at 1230 GMT. Expectations are for a 1.5 percent contraction rate compared with a 1.0 percent rate of contraction in the first reading.
"The risk is that a downward revision may give the dollar some support from a risk point of view," said Chris Gothard, currency strategist at Brown Brothers Harriman in London, pointing out that a weak reading may increase risk aversion and trigger safe-haven flows into the U.S. currency.
China's cabinet said on Wednesday it would take steps to curb overcapacity and redundant investment in industries ranging from steel to wind power equipment, the official Xinhua news agency reported.
Analysts said this may stifle improvements in the Chinese economy, which could have a negative impact on the nation's equities, at least in the short-term. (Editing by Andy Bruce)