* Swiss franc, yen gain
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, June 8 (Reuters) - The dollar extended gains on Friday but is set for its biggest weekly drop in 11 weeks while perceived safe-haven currencies including the yen and Swiss franc rose as markets shifted to wait-and-watch mode before an event-packed week.
Before what is likely to be an acrimonious G7 meeting starts in Canada later in the day, traders cut risky bets after three weeks of gains in equities and higher-yielding assets.
Next week's expected hike in U.S. interest rates, a European Central Bank policy meeting and a Brexit bill vote all pose risks for currency traders and could pull currencies out of recent trading ranges. For a factbox, see
"A combination of the G7 meeting and other major events such as the Trump-Kim summit next week is also keeping investors on edge," said Constantin Bolz, a fund manager at Portfolio Concept, a German-based private wealth management firm.
While the dollar rose 0.4 percent against a basket of currencies at 93.76, it was poised to notch up its biggest weekly drop since late March.
Trade disputes between the United States and its major partners will be in the spotlight, with the Mexican peso and the Canadian dollar leading losers.
The peso fell to its weakest level against the dollar in 16 months on Friday.
High yielding currencies were a sea of red with only the Swiss franc and the Japanese yen higher on the day.
"Safe-haven assets are in demand," said Christin Tuxen, a currency strategist at Danske Bank.
The dollar has come under pressure this week as the euro bounced back from 10-month lows thanks to an ebb in Italian political concerns and speculation that the ECB could signal intentions to start unwinding its massive bond purchasing programme when it holds the policy meeting on June 14.
The euro fell half a percent to $1.1738 after rising to a three-week high of $1.1840 overnight as investors took profits into this week's bounce.
It was up more than 1 percent on the week and was set to post its biggest weekly gain since mid-February.
While expectations have grown that the ECB will signal its intention to wind down the quantitative easing programme, ING strategists believe the Italian political situation and the potential of a breakout in trade tensions will stay its hand.
"We do not expect a clear announcement of an end to QE next week but rather hidden hints during the question and answer session," they wrote in a note.
Elsewhere, the Australian dollar fell more than 0.7 percent to $0.7564 and is poised for its biggest weekly drop in a month.
But despite all the events carrying potential risk, overall currency volatility remained at low levels with implied volatility on one month euro/dollar segment still below February highs.
Reporting by Saikat Chatterjee Editing by Raissa Kasolowsky and David Stamp