* Yen pressured as Japan investors sell for fiscal year-end
* Yen nudged off lows as Tokyo stocks shed early gains
* Euro seen pressured ahead of ECB
By Shinichi Saoshiro
TOKYO, March 31 (Reuters) - The yen slid broadly on Tuesday on a surge in Japanese investors' demand for foreign currencies on the last day of Japan's financial year.
The dollar gained against the yen but retreated against other peers as safe haven bids eased for the time being.
The yen and the dollar, used as safe havens during times of financial market turmoil, were boosted the previous day as fears of bankruptcy for U.S. automakers General Motors and Chrysler sparked a sharp drop in global stock markets.
The greenback is on course for a gain of 8 percent against the yen for the first quarter of 2009, its biggest quarterly rise since the end of 2001, according to Reuters data. The euro looks set for a gain of 2 percent against the Japanese currency for the quarter.
The yen retraced a significant part of Monday's gains as the end of Japan's financial year generated book-keeping demand for foreign currencies.
But a shaky performance by Tokyo's Nikkei stock average N225> , which gave back early gains to end down 1.5 percent, helped the Japanese currency off lows.
Stocks fell even though the Japanese government is expected to include steps to buy shares from the market as part of its new economic stimulus package. Some details of the plan will be announced by Prime Minister Taro Aso on Tuesday.
"It can be said that a reverse correlation between the yen and stocks appears to be returning, but factors that move the yen change almost every day as the market has been thinned by the financial crisis," said Toru Umemoto, chief forex strategist for Japan at Barclays Capital.
The dollar gained 1 percent to 98.20 yen while the euro advanced 1.5 percent to 130.20 yen
"The dollar is being buoyed as Japanese investors try to secure currency on the last day of the fiscal year. Investors' demand for the yen stemming from repatriation flows, on the other hand, appears to have peaked," said a trader at a Japanese bank.
The dollar index, a gauge of the greenback's strength against a basket of key currencies, fell 0.2 percent to 85.565
The euro edged up 0.3 percent to $1.3236 but is down 5 percent against the U.S. currency since the start of the year.
The euro rose against its rivals on Tuesday but analysts say prospects for more gains appear difficult after credit rating cuts for Hungary and Ireland on Monday and ahead of an expected interest rate cut by the European Central Bank on Thursday.
The ECB is expected to reduce rates to a record low of 1.0 percent from 1.5 percent.
With narrowing scope for more rate cuts, the market is focusing on whether the central bank will open the door for quantitative easing as its counterparts in the United States, Britain and Japan have already done.
The Australian dollar climbed 0.7 percent to $0.6863 after hitting a near two-week low of $0.6770 the previous day on renewed risk aversion.
The Aussie advanced 1.6 percent to 67.34 yen on course for a gain of 5 percent on the quarter.
Reserve Bank of Australia Deputy Governor Ric Battellino said there was room for further rate cuts.
He warned Australia could not escape the global slowdown but felt the substantial easing in both monetary and fiscal policy meant it would fare better than many other economies. (Editing by Kim Coghill)