(Updates data, adds quote)
* Dollar falls with oil; less risky currencies gain
* Euro, yen rise vs dollar as investors seek safety
* Canadian dollar down 1 percent
By Dion Rabouin
NEW YORK, Jan 25 (Reuters) - The dollar edged lower on Monday as renewed selling in oil markets drove investors into currencies often deemed less risky investments, such as the euro, Swiss franc and Japanese yen.
Crude oil futures fell 6 percent after Iraq announced record-high oil production, feeding into a heavily oversupplied market, and senior officials with the Organization of the Petroleum Exporting Countries (OPEC) signaled they were unlikely to reduce crude production unless non-OPEC countries did likewise.
U.S. stock indexes fell, following their European counterparts, dragged down by energy stocks.
"Oil recovered (last week) because some people were thinking that that was the bottom and started to buy back, but after the (OPEC) comments on Monday, again we're starting to see rapid decline in oil prices," said Alfonso Esparza, senior currency strategist at Oanda in Toronto.
Oil had surged on Friday, gaining around 10 percent, in one of the biggest daily rallies ever.
Monday's oil price fall turned investors' focus back onto a broadly negative outlook for the world economy that has dominated since the start of 2016, amid slowing growth in No. 2 economy China and weakness in oil prices.
That outlook has tended to benefit the euro, yen and Swiss franc at the expense of the dollar.
"The negative shock of the first couple of weeks is still pretty strong," said Vassili Serebriakov, currency strategist at BNP Paribas in New York. "The roadmap has been that the yen and the euro tend to outperform when markets feel jittery."
European Central Bank President Mario Draghi helped normalize sentiment last week when he suggested the bank could add to its stimulus program as early as March, Serebriakov added, "but I think it will take a while before markets find some sustained stability."
The dollar fell 0.4 percent against the yen to 118.33 yen , but was well off last week's one-year low of 115.97 yen. The euro rose about 0.5 percent to $1.0850. The Swiss franc rose as the dollar fell 0.3 percent to 1.0129 francs.
The Canadian dollar was the biggest mover among major currencies, falling 1 percent against the U.S. dollar. Canadian currency traded at C$1.4261 per U.S. dollar.
"Right now the Canadian dollar and oil are joined at the hip, so whenever there's a move in oil it's going to drag down the loonie," Esparza said. (Additional reporting by Patrick Graham in LONDON, Lisa Twaronite in TOKYO; Editing by Meredith Mazzilli)