* Italian official in anti-euro comments, then rows back
* Dollar rallies across the board
* Yen, Swiss franc gain as markets slide
LONDON, Oct 2 (Reuters) - The euro fell to a six-week low on Tuesday after a senior lawmaker in one of Italy’s ruling parties said most of the country’s problems would be resolved if it readopted a national currency, triggering a broad market sell-off.
The euro also slumped against the safe-haven yen and Swiss franc, while the dollar surged to a one-month high as investors piled in and sold riskier assets such as equities.
Markets are highly sensitive to Italian political developments after the country’s coalition proposed a budget with a higher-than-expected deficit target, exacerbating tensions with other euro zone leaders and worrying investors who want Rome to bring its debt under control.
DOLLAR RALLY
The dollar index rose 0.4 percent to 95.693, a six-week high.
Fears about a rumbling U.S./China trade conflict have lifted the dollar this year, as has an increasingly confident U.S. Federal Reserve, which looks to be more and more alone in tightening policy.
Against the yen, the dollar fell 0.2 percent to 113.78 yen on the Japanese currency’s safe-haven status.
A U.S.-Canada trade deal announced on Monday had sent the yen to an 11-month low of 114.06 per dollar as the agreement boosted investor appetite for risk.
The Australian dollar - often viewed as a barometer of risk appetite - fell 0.9 percent $0.7162 as markets worldwide were spooked by the euro zone concerns. The Reserve Bank of Australia earlier held interest rates at 1.5 percent, a widely expected decision.
The Canadian fell 0.2 percent to C$1.2840 per dollar, reversing some of its gains on Monday.
Sterling, hit both by the broader market tumble and the latest Brexit nerves, skidded 0.7 percent to as low as $1.2941.