The dollar surged on Wednesday, closing in on 100 yen, as contracting Australian growth and concern about Japan's economy heightened global financial stress, drawing investors to the highly liquid U.S. unit. Broad dollar gains shook the euro to its lowest in more than three months, while yen weakness was amplified by the arrest of a close aide to Japan's opposition leader in a fund-raising scandal that further clouded the political picture. Figures released earlier showed Australia's economy unexpectedly contracted last quarter for the first time in eight years, sending the Australian dollar tumbling and taking the euro with it. Bank of Japan board member Miyako Suda said on Wednesday it was hard to say whether the economy had hit bottom and voiced concerns on tumbling share prices. "The markets have a view that Asia is going to perform just as badly maybe as Europe and the U.S. this year and there's a view that dollar/Asia en-masse should go higher," said Chris Turner, head of FX research at ING in London. On the stimulus front, China will increase spending in areas such as infrastructure and manufacturing on top of the 4 trillion yuan stimulus package unveiled in November, a senior economic planning official said. By 1022 GMT, the dollar was up 1.1 percent on the day at 99.40 yen, having earlier hit 99.48 -- its highest since early November -- according to Reuters data. The euro fell as far as $1.2457 on trading platform EBS to its lowest in more than three months. It was last down 0.3 percent at $1.2521 yen. Data showed the euro zone's service sector was still in decline in February, with services PMI hitting a record low.

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