* Easing in risk aversion leads yen lower
* Higher-yielding currencies in demand on risk appetite
* Trade subdued with U.S. markets closed
By Kaori Kaneko
TOKYO, Jan 19 (Reuters) - The yen fell broadly on Monday as a rally in share prices helped calm investors' risk aversion, boosting higher-yielding currencies.
Trade is expected to be quiet as financial markets in the United States are closed on Monday for Martin Luther King Day.
Investors' anxiety about the ailing U.S. financial sector slightly receded on government aid for the sector, lifting U.S. shares and reducing safe-haven flows into the dollar and yen.
Tokyo's Nikkei share average advanced 1.0 percent and the MSCI index of Asia-Pacific stocks outside Japan climbed 0.9 percent.
But analysts said the currency market was cautious about the sustainability of gains in share prices as the global economy is still in a severe situation.
"The currency market lacks direction and is moving within limited ranges. Gains in U.S. shares were within the range of rebounds and the U.S. financial sector still faces difficult times," said Yousuke Hosokawa, treasury department senior manager at Chuo Mitsui Trust and Banking Co.
Bank of America and Citigroup both reported multibillion dollar quarterly losses on Friday and Citigroup said it would split into two operating units.
Traders were also keeping to the sidelines ahead of President-elect Barack Obama's inauguration on Tuesday.
The dollar rose 0.4 percent from late New York trade on Friday to 91.03 yen.
The euro climbed 0.7 percent to 121.50 yen and by 0.3 percent to $1.3348 in late U.S. trade.
The dollar index, which measures the value of the greenback against a basket of currencies, was down 0.7 percent at 83.587.
There were advances by higher-yielding currencies such as the Australian and New Zealand dollars, widely seen as a gauge for risk appetite.
The Aussie rose 0.8 percent to $0.6786 and against the yen was up 0.4 percent at 61.78 yen.
The New Zealand dollar rose 0.6 percent to $0.5511 and 0.2 percent to 50.15 yen. (Editing by Michael Watson)