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* Australian dollar follows yuan lower, hits lowest multi-year low
* Yen trades firm as risk-off grapples Asian stocks
* Draghi fails to boost confidence in the euro
* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
By Vatsal Srivastava
SINGAPORE, Oct 26 (Reuters) - The Japanese yen strengthened versus the U.S. dollar on Friday as appetite for riskier assets remained suppressed while the euro stayed near two-month lows after the European Central Bank failed to convince markets that rates would rise.
The Australian dollar, often viewed as a gauge of risk appetite, hit a near 33-month low as sentiment in Asian trade weakened.
Thursday's rebound of U.S. stocks after the previous session's massive sell-off was not sustained into the Asian day, which lent support to safe haven currencies.
At 0408 GMT, MSCI's broadest index of Asia-Pacific shares outside Japan was down 1.38 percent.
The U.S. dollar lost 0.2 percent to be 112.14 versus the Japanese yen, a safe haven currency.
Analysts see many persisting risks for markets, including trade tensions, Italy's budget woes, geopolitical uncertainties and concerns about U.S. corporate earnings.
"The risk sentiment is still quite fragile," said Sim Moh Siong, currency strategist at Bank of Singapore. "Overnight, we had Amazon and Alphabet declare results which were not that cheerful. I expect the yen to re-test its recent highs."
The euro traded marginally lower at $1.1365 on Friday. It hit a two-month low of $1.1353 the previous session, following European Central Bank President Mario Draghi's failure to convince traders the ECB could pursue monetary tightening after next summer as political and economic uncertainties grow in the monetary union.
The ECB reaffirmed on Thursday that its 2.6 trillion euro ($2.97 trillion) asset purchase programme would end this year and that interest rates could rise after next summer.
The policy guidance has been consistent since June, even though the economic outlook has darkened while political turmoil in Italy looms over the currency bloc.
Analysts said markets remain sceptical about the ECB rates given inflation remains tepid.
"The risk, therefore, is that the guidance that interest rates will stay at current levels at least through the summer of 2019 will be pushed back," said Brian Martin, senior international economist at ANZ in a note. "That could well leave the euro vulnerable to further downside in the near term."
The dollar index traded flat at 96.61 on Friday, after hitting a two-month high on Thursday. The gains in the dollar index were largely due to the losses in the euro, which has a 57.6 percent weighting in the index.