FOREX-Yen hits 8-month high vs dollar then pulls back

* Yen rallies broadly, hits 8-month high versus dollar

* Japan finmin says yen gain not "abnormal", then backtracks

* Euro shows little reaction to German election results

(Adds comment, details, updates throughout; previous TOKYO)

By Naomi Tajitsu

LONDON, Sept 28 (Reuters) - The yen hit an eight-month high against the dollar on Monday but later pulled back after Japan's finance minister appeared to tone down comments suggesting he was comfortable with the currency's appreciation.

The dollar rose against other, higher-yielding currencies including the euro and the Australian and New Zealand dollars, as weak global shares chilled risk demand, while the single European currency brushed off a widely expected election victory by German Chancellor Angela Merkel.

Extending gains into a third session, the yen jumped to 88.23 yen against the dollar, its strongest since late January, after reported comments by Japanese Finance Minister Hirohisa Fujii that recent dollar/ yen moves were not abnormal.

Later on Monday, Fujii said he had never said he approved of a strong yen nor that he would leave a yen rise "as it is" [ID:nT241084].

The yen has rallied broadly this month, pushing the dollar down about 4 percent since the start of September, as a raft of statements from Fujii suggested Japan's new government may not be as keen as its predecessor to intervene in currency markets to keep the yen weak.

The dollar clawed back some losses to trade around 89.58 yen by 0755 GMT, but analysts said more yen gains were likely and that a rally to the year's high of 87.10 yen was possibile.

"(Fujii) tried to calm the market a bit, but he doesn't seem to have changed his position (on intervention)," said Lutz Karporwitz, currency strategist at Commerzbank in Frankfurt.

"It looks like fund repatriation and the lack of fear of intervention is fitting the framework for a stronger yen, at least for now."

The euro traded half a percent lower at $1.4605, pulling further away from a one-year high around $1.4842 hit last week, taking a cue from a 0.8 percent slide in European shares. Weaker stock prices helped to knock both the Australian and New Zealand dollars around 0.7 percent against the U.S. currency.

Yen gains against the dollar pushed the Japanese currency broadly higher. The euro fell as low as around 129.85 yen, its weakest since mid-July, while sterling plunged as low as a five-month trough of 139.80 yen.

The pound suffered against most currencies, sliding sharply to $1.5770 , its lowest since late May and breaking below support for sterling at around $1.5800.

The pound has been under pressure since Bank of England Governor Mervyn King said last week that a weak pound would help exports and the UK economy.

In Sunday's German election, Chancellor Angela Merkel's conservative party won a parliamentary majority with the FDP, her partner of choice, enabling her to end her awkward four-year-old partnership with the Social Democrats. [ID:nLS158960]

Analysts at UBS said the vote outcome was widely expected by the market, and would be neutral to marginally positive for the euro.

"(B)arring any spectacular breakdown in coalition discussions in the coming weeks, the vote will be considered a good outcome for the euro zone's largest and most important economy, especially if necessary reforms can be carried out over the next four years." they wrote in a research note.

(Editing by Nigel Stephenson)