* Dollar hits 8-month low vs yen, third month of declines
* Euro falls vs dollar on Friday; snaps 7-month decline
* U.S. 2nd-quarter growth slows to 2.4 pct on imports
* Chicago PMI for July jumps, offsetting some pessimism (Updates prices, adds details)
By Nick Olivari
NEW YORK, July 30 (Reuters) - The dollar hit its lowest since November against the Japanese yen on Friday as data showed growth in the world's largest economy is slowing, reinforcing expectations for low U.S. interest rates into 2011.
Dollar bears sold the U.S. currency against the yen after the government said in its first estimate that U.S. gross domestic product expanded at a 2.4 percent annual rate in the second quarter after an upwardly revised 3.7 percent pace in the January-March quarter. For details, see [ID:nN29111411]
Analysts said Friday's report follows a string of weak data from the United States that has weighed broadly on the dollar. They added that the data may also hurt demand for perceived riskier assets, favoring investments in currencies such as the yen and the Swiss franc.
The dollar fell 2.2 percent against the yen JPY= in July, the third straight month of declines, while the euro rose 6.7 percent EUR= against the dollar for the month -- its best month since May 2009 -- snapping seven straight months of declines.
"It's going to be very difficult for a (dollar) rally and people are going to get more risk averse. You could see euro go below $1.30 and the dollar fall below 86 yen," said Boris Schlossberg, director of FX research at GFT Forex in New York.
The GDP report "is not helpful to the risk trade or the dollar-yen since we're seeing across all U.S. data releases signs that the U.S. economy really is stuck in the mud," he added.
In late afternoon trade in New York on Friday, the dollar was down 0.4 percent at 86.38 yen after hitting an eight-month low of 85.95 yen following the GDP report, according to Reuters. It was the third day of declines for the dollar against the yen.
Stop-loss sales were triggered earlier at a previous low of 86.25 yen, traders said.
"We're in a small window where U.S. economic data is underperforming and keeping pressure on the dollar," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.
"Concerns about the U.S. economy and Fed easing will also put U.S. yields on the downside, which is a key driver for dollar/yen," he said.
The dollar pared some of its losses against the yen after another report showed a jump in business activity in the U.S. Midwest in July, but the relief was short-lived. [ID:nN30265688]
The yen took comments by Japanese Finance Minister Yoshihiko Noda that he was closely watching the market in stride. Deputy Finance Minister Motohisa Ikeda said he was worried about the impact of a rising yen on Japan's exports. [ID:nTFD006497] [ID:nTFD006498]
But traders and analysts said they do not expect Japanese authorities to intervene to stem the yen's rise until it goes beyond 84.81 yen to the dollar, hit in November 2009, according to Reuters data. That was a 14-1/2-year high for the yen.
The dollar also fell to a six-month low against the Swiss franc at 1.0364 francs CHF=, but it was last little changed. The euro fell 0.6 percent against the yen EURJPY= to 112.78 yen and 0.2 percent against the dollar to $1.3053 on Friday.
Traders said the euro's fall against the yen was related to redemption flows from Spanish bonds. [ID:nLDE66M1PR]
The euro's recovery to an 11-week high against the dollar earlier in the week was partly driven by rising euro zone money market rates, which fell on Friday [ID:nEAP000492].