* Dollar climbs to 3-month highs on Japan year-end demand
* Euro holds above $1.3400 but still vulnerable
* Aussie falls as data dampens rate hike bets
(Adds quote, updates prices, changes dateline prvs TOKYO)
By Tamawa Desai
LONDON, March 31 (Reuters) - The dollar hit a three-month high against the yen on Wednesday as strong dollar demand from Japanese importers for financial year-end book closing triggered widespread buying, putting the pair's year highs in sight.
Traders said Japanese banks, life insurers and hedge funds were seen buying dollars as the greenback broke above the key 93 yen level, cancelling out Japanese exporters' dollar selling.
"We've seen a pick-up in dollars from Japanese investors, who are seen increasing dollar-denominated assets on an unhedged basis for the new fiscal year," said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ in London.
By 0845 GMT, the dollar rose 0.5 percent at 93.30 yen. It had climbed to 93.60 yen on electronic trading platform EBS, its highest since early January, which was also the next target at 93.78 yen, traders said.
Selling interest was initially seen near 93.50 yen, traders said.
"Dollar/yen may keep its rising momentum if it manages to end today's New York trading above 93 yen, which would make charts look attractive for tech-driven players to chase the dollar higher," said a foreign exchange manager for a Japanese trust bank.
The dollar's rise against the yen prompted gains in other cross yen pairs, with sterling hitting a one-month high at 140.96 yen.
The euro rose 0.7 percent to 125.31 yen, holding near a two-month high of 125.47 yen hit on Tuesday, with support expected at about 124.20 yen.
EURO VULNERABLE
The single European currency held slightly above $1.34, but remained vulnerable near 10-month lows on concerns over euro zone fiscal and economic health.
The spread between Greek and German 10-year benchmark bonds widened on Wednesday.
"Greece will still be a major concern for the euro," BTM-UFJ's Hardman said.
News that Ireland would take a bigger stake in the banking sector than planned added to the air of uncertainty.
On the quarter, the euro was down 6.2 percent against the dollar, on track for its biggest fall since Q3 2008.
The dollar index was little changed to 81.407, just below a 10-month high of 82.240 hit last week. It has risen almost 5 percent this quarter.
Ahead of the highly anticipated U.S. nonfarm payrolls data due out on Friday, traders will watch the private sector ADP jobs report for March due at 1215 GMT, with forecasts 40,000 jobs were created against 20,000 lost in February. U.S. factory orders for February are due at 1400 GMT are
The Australian dollar fell 0.3 percent to $0.9153 after retail sales data came in lower than forecast, denting expectations for a rate rise by Reserve Bank of Australia next week.
(Additional reporting by Aiko Hayashi in Tokyo)