* Yen surges as much as 4.4 pct vs USD
* Rush to yen reflects investor angst globally (Updates market action, comments)
By Saqib Iqbal Ahmed
NEW YORK, Jan 3 (Reuters) - The yen rose against the dollar and euro on Thursday as investors sought the perceived safety of the Japanese currency after a surprise revenue warning from Apple Inc exacerbated concerns about a Chinese and global economic slowdown.
Data showing U.S. manufacturing activity slowed sharply to a two-year low in December, and a drop in two-year Treasury debt yield below a key Federal Reserve rate, the first such occurrence since 2008, exerted further pressure on the greenback.
The fed funds effective rate is the Fed's key policy rate. The market move suggests investors believe the central bank will not be able to continue to tighten monetary policy as its forecast suggests.
The dollar was 1.18 percent lower against the yen at 107.59 yen, while the euro was 0.73 percent lower against the yen.
"It certainly looks like another ominous sign," said Juan Perez, senior currency trader at Tempus Inc in Washington, referring to the dip in U.S. two-year Treasury note yield.
Caution drove investors to the Japanese yen, the traditional go-to currency in times of stress because traders believe the legions of Japanese investors holding money overseas will rush back into Japan when markets are in flux.
"Clearly the Japanese yen is a beloved safe-haven asset when the globe seems to be in chaos," said Perez.
Earlier in the session, the yen rose to as much as 4.4 percent stronger versus the dollar after a flurry of automated orders triggered a massive move in thinly traded Asian markets after Apple's warning about weak iPhone demand hurt global risk sentiment.
"The time between New York close and Asian open is notoriously thin as it is, and couple that with a Japan holiday and Apple news that smacked the equity and you had a nice recipe for a sharp JPY rally," Brad Bechtel, global head of FX at Jefferies, said in a note.
The greenback weakened as dismal data on U.S. manufacturing activity suggested the economy was probably not immune to slowing growth in China and Europe.
"Last month's decline was the biggest monthly fall since October 2008 and will only intensify recent concerns in financial markets over the health of the U.S. economy," Andrew Hunter, senior U.S. economist at Capital Economics in London, said in a note.
The dollar's recent weakness also reflects a shift in investor expectations for U.S. interest rate rises.
Investors will be looking for cues about interest rate hikes from a discussion between Federal Reserve Chair Jerome Powell and former Fed Chairs Janet Yellen and Ben Bernanke on Friday.
Sterling was 0.18 percent higher against the greenback as worries about the health of the global economy and particularly China prompted investors to avoid currencies considered riskier.
The Canadian dollar strengthened to a nearly two-week high against its U.S. counterpart on Thursday as oil prices rose and the greenback broadly declined.
Reporting by Saqib Iqbal Ahmed; Editing by Bernadette Baum and Jonathan Oatis