* Greek worries hurt euro, political uncertainty hits pound
* Yen shorts neutralised before weekend on yuan view
* Yen gains, Aussie dollar falls as risk positions closed
By Kaori Kaneko
TOKYO, April 16 (Reuters) - The euro fell on Friday on
scepticism about Greece servicing its debt, while the yen surged
as caution about a possible revaluation by China led yen sellers
to close short positions ahead of the weekend.
The Australian dollar was hardest hit by the yen position
closing, while sterling also dropped after a TV debate among
prime ministerial candidates in Britain revived market concerns
there would be no outright winner in a May 6 election.
Falls in regional stocks after a recent strong run also
prompted investors to neutralise riskier positions funded by the
low-yielding yen.
The market is looking out for signs on whether China will
allow more yuan appreciation or tighten monetary policy, and
short-term players cut holdings in cross/yen on caution over a
possible sharp rise in the yen in response to such moves.
"Investors need to reduce risks and they don't want to hold
yen short positions over the weekend due to speculation that
China may revalue the yuan, as well as the euro's shakiness,"
said Kazuyuki Kato, treasury department manager at Mizuho Trust
& Banking.
The euro <EUR=> lost 0.2 percent to $1.3540 after dropping
to $1.3520 on trading platform EBS on Thursday. Loss-cutting
euro sell orders are expected at $1.3475, said a trader at a
European bank in Singapore.
"I think the sovereign issues along with lack of growth in
the euro zone will undermine investor confidence in the euro,"
said Richard Grace, chief currency strategist at Commonwealth
Bank, Sydney.
"We have a year-end target for the the euro at $1.30 and
then slightly below that by the start of next year."
The single currency fell 0.5 percent to 125.58 yen
<EURJPY=R> with talk of selling by model funds early on, and any
break below 125.00 yen was expected to be a catalyst for more
selling.
It added to its 0.8 percent fall on Thursday when the cost
of insuring against a Greek default rose and the Greek/German
government bond yield spread widened to near record levels.
Officials from the EU Commission, the European Central Bank
and the IMF are expected in Athens on Monday to talk about aid
for Greece after it requested a meeting. []
The dollar index <.DXY>, which tracks the greenback versus a
basket of major currencies, rose 0.1 percent at 80.60,
recovering from a four-week low of 80.031 hit on Wednesday. It
faces some resistance in the 80.75 area.
The dollar slipped 0.2 percent to 92.70 yen <JPY=> as San
Francisco Fed President Janet Yellen followed other Fed
officials in backing an "extended period" for low interest
rates, adding to to downward pressure on the greenback, traders
said. []
Stop loss orders for the dollar are thought to be placed
from 92.50 yen down to 92.20 yen, a trader at a Japanese trust
bank said.
STERLING, AUSSIE FALL
The Aussie has been a favoured buy against the yen but
liquidation of long positions picked up pace after it failed to
punch above a 19-month high of 87.55 yen set on Wednesday,
sending it spinning down as much as 1 percent near 86.00 yen.
It edged back to 86.20 yen <AUDJPY=R> later but was still
down 0.7 percent on the day.
It fell 0.4 percent to $0.9306 <AUD=D4>, with resistance
just below $0.9400 proving hard to break down.
The pound <GBP=D4> fell as the possibility of a hung
parliament grew after the heads of Britain's two main political
parties were bested in a TV debate by the leader of the third
party the Liberal Democrats, Nick Clegg. [].
Sterling shed 0.4 percent to 143.26 yen <GBPJPY=R> and 0.2
percent to $1.5445 <GBP=D4>, but was little changed against the
weaker euro <EURGBP=D4>.
(Reporting by Anirban Nag in Sydney, Charlotte Cooper in Tokyo;
Editing by Joseph Radford)
