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FOREX-Yen gains broadly as risk appetite fades

Published 03/09/2010, 04:14 AM
Updated 03/09/2010, 04:16 AM

* Equity market losses prompt demand for Japanese currency

* Exporters buying yen versus euro, dollar

* Euro still weighed by Greek concerns

(Updates prices, adds quotes; previous TOKYO)

By Neal Armstrong

LONDON, March 9 (Reuters) The yen gained broadly on Tuesday as Asian equity markets traded in the red, prompting a pullback in risk trades and a move into the low-yielding Japanese currency.

Risk appetite had been boosted by Friday's better-than- expected U.S. employment report, pushing the yen down to two-week lows versus the euro and the dollar.

But a lack of follow-through at the start of the new week had left traders searching for fresh impetus.

"With equities drifting lower overnight and U.S. stock futures in the red, the yen has made gains. There is also no specific impetus to drive us forward today as the data calendar is light", said Jeremy Stretch, currency strategist at Rabobank.

Traders said Japanese exporters were in the market buying yen fairly actively, with further demand for the Japanese currency likely into fiscal year-end on March 31.

At 0850 GMT, dollar/yen was trading down 0.3 percent at 89.95 yen, just off Asian session lows.

Further yen gains may be limited by speculation that the Bank of Japan may take further steps to ease monetary policy.

"The dollar is likely to be supported at levels around 89.50 yen on speculation about more monetary easing steps from the BOJ, possibly at its policy meeting next week," said a trader for a Japanese trust bank.

The BOJ is in the spotlight after the Nikkei newspaper reported on Friday that it was examining easing again and may decide on such a move when it meets on March 16-17.

Euro/yen was down around 0.6 percent at 122.35 yen after falling to 122.23 in Asia.

The euro was slightly softer versus the dollar at $1.3605 after struggling on Monday as Greek Prime Minister George Papandreou warned if the Greek crisis worsened it could lead to a new global financial meltdown..

Worries over Greece's and other peripheral euro zone countries' debts have weighed on the single European currency, driving it down over 10 percent from its November 2009 highs.

"Euro sentiment is unimpressive, with euro/dollar trading little higher than where it was at the height of Greek-related panic. We doubt this story has run its full course," said analysts at ING in a note.

Greek Finance Minister George Papaconstantinou was due to meet the IMF informally in Washington, an IMF official said on Monday.

The dollar was unchanged versus a basket of currencies at 80.495, though it remained close to its 2010 high of 81.342.

STERLING SLIPS

Sterling was under pressure after data showing British house prices grew last month at their slowest pace since August weighed on sterling.

Another negative factor for the pound was a Moody's Investors Service report saying Britain faces a difficult balancing act in deciding how and when to reduce support for the banking sector, given growth in the UK's public debt burden.

Sterling was down around 0.4 percent at $1.5000, while it shed around 0.7 percent against the yen to stand at 135.05 yen. (Additional reporting by Masayuki Kitano; Editing by Stephen Nisbet)

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