* Yen falls broadly, EUR/JPY hits 10-mth high
* Market focus on rate differentials, Fed comments boost USD
* Analysts: Euro to benefit most from rate rise speculation
(Adds comment, updates throughout)
By Naomi Tajitsu
LONDON, March 30 (Reuters) - The yen slipped to a 10-month low versus the euro and suffered broadly on Wednesday after recent hawkish comments from euro zone and U.S. officials contrasted with Japan's loose monetary policy stance.
The euro rose to around 117.30 yen, its strongest since May, and was seen climbing higher on expectations the European Central Bank will raise interest rates as early as next month, with further tightening possible.
The dollar rose to around 83.15 yen, a level last seen on March 11 when the yen initially fell after Japan's earthquake. Offers around that level capped further gains for the moment and traders expected resistance at around 83.30 yen.
Hawkish comments in recent days from U.S. Federal Reserve and European Central Bank officials contrasted with the stance taken by the Bank of Japan, which is set to leave interest rates near zero for some time to support the world's third-largest economy as it recovers from the effects of the earthquake.
Dallas Fed President Richard Fisher said on Tuesday he would vote against further monetary easing after the Federal Reserve's $600 billion bond buying programme ends in June.
That pushed up short-dated U.S. Treasury yields, widening their differential with Japanese ones as investors took the comments as an indication of eventual monetary tightening.
"The yen is very sensitive to rate differentials, and with U.S. short-end yields going up on expectations the Fed will at some point raise rates, the dollar is rising against the yen," said Marcus Hettinger, global currency strategist at Credit Suisse in Zurich.
The comments supported the dollar across the board, nudging the euro down 0.2 percent on the day to $1.4075 and boosting the dollar slightly against a currency basket.
Still, Credit Suisse's Hettinger said dollar gains may be short-lived as an actual rate rise by the Fed is still expected to be a long way off, while expectations the ECB will raise rates next month and beyond would continue to support the euro.
Such anticipation has pushed the euro more than 5 percent higher against the dollar this year, and its apparent resilience to fiscal problems facing weak euro zone countries has earned it the title of "Teflon euro" among some in the market.
"I would be confident in the euro at these levels," said Pierre Lequeux, head of currency management at Aviva Investors. "I like the euro, basically, and I see some upside."
He added that he would be interested in the euro into the $1.45-1.50 region, arguing that authorities were unlikely to voice opposition to the euro at $1.50 given the outlook of rising inflation and a pick-up in economic growth in the region.
The sovereign debt crisis was unlikely to significantly weaken the euro in the longer term so long as it did not lead to a break-up of the euro zone, Lequeux said, while a weak jobs picture would keep the Fed from raising rates any time soon.
At the same time, some traders in London said fund manager flows in the euro had been scant in recent days, while demand was largely limited to corporates and sovereign entities.
AUSSIE SHINES
By 0943 GMT, the euro was up 0.6 percent on the day at 117.05 yen.
The dollar was up 0.8 percent at 83.15 yen. Traders said the topside was littered with stop-loss orders at regular intervals, while offers at 83.50 and 84.00 kept a lid on further gains for now.
Still, speculation that Japanese investors may reduce dollar hedging positions related to their overseas investments, and the absence of huge repatriation flows following the quake are shifting the focus back to economic fundamentals, which are reinforcing the yen's status as a funding currency.
The market's focus on rate differentials benefitted higher-yielding currencies including the Australian dollar, which traded at $1.0310, near a 29-year high of $1.0334 hit earlier in the day.
Market participants said the Aussie had more room to gain as European investors were keen to buy the currency on any dips given the view that a solid Australian economy meant interest rates in the country would continue to rise. (Editing by Susan Fenton/Ruth Pitchford)