NEW YORK, Aug 6 (Reuters) - An epic unwinding of the

yen-funded carry trade that has reverberated through global

markets is only about 50% done, a UBS analyst estimated on

Tuesday.

Days of havoc in global markets have analysts rushing to

calculate the size of a global carry trade in which investors

have borrowed money from economies with low interest rates, such

as Japan or Switzerland, to fund investments in higher-yielding

assets elsewhere.

The strategy, which kept money flowing into global risk

assets for years, was shaken after the Bank of Japan raised

interest rates last week, forcing some investors to abandon the

trade as the yen surged higher. The resulting unwind sparked

huge losses in global stock markets and saw Japan's Nikkei notch

its worst day since 1987.

James Malcolm, a UBS Japan macro strategist based in London,

estimates that the dollar-yen carry trade grew to at least $500

billion at its peak and is not done unwinding.

"I'd guess the carry trade is only about 50% unwound," he

wrote in a Tuesday note to clients.

Malcolm calculates that about $200 billion of the carry

trade has been unwound over the last two to three weeks.

"How much the carry trade could unwind depends not so much

on the level of the interest rate differential but the change in

the interest rate differential," he said.

Malcolm estimates there is still some $300 billion of the

trade left to unwind.

"Comparing this unwind with 1998 (dollar-yen) carry trade

unwind suggest more unwinds to come."