* Yen, Swiss franc big gainers on safe-haven bids
* China committed to buying Spanish debt, boosts euro
* Japan nuclear situation deteriorates
(Adds quotes, updates prices, changes byline)
By Julie Haviv
NEW YORK, April 12 (Reuters) - The yen and Swiss franc
gained sharply on Tuesday on risk aversion partly brought on by
fears of a worsening nuclear situation in Japan, but the
sentiment may prove transitory given expectations investors'
appetite for higher-yielding currencies should return.
Japan's ordeal, a commodities sell off, and a lackluster
start to the U.S. earnings season prompted investors to book
profits on carry trades, where investments in riskier assets
and higher-yielding currencies are funded by going short on the
low-yielding currencies such as the yen and Swiss franc.
"The shakeout in risk positioning, after Japan upgraded its
nuclear emergency level caught the market short of yen, has
been quickly bought into, outlining resilient market attitudes
towards risk in line with our call," said Lena Komileva, global
head of G10 strategy at Brown Brothers Harriman in New York.
"Yet, the euro's rebound today has been about more than the
return of Japanese demand for euros above the 120 mark."
Against the yen, the euro was down 0.8 percent at 121.24,
recovering from a low of 120.16 yen <EURJPY=EBS> hit earlier in
the day.
"Growth in carry trades are owned heavily and looked
overextended, especially the yen crosses. These are the ones
looking shaky," said Tom Fitzpatrick, chief technical
strategist at CitiFX in New York.
The initial sell-off in risk was prompted by Japan's
Nuclear Safety Agency raising the severity rating of the
Fukushima accident to level 7 -- the highest classification and
the same as the world's worst nuclear disaster at Chernobyl in
1986. For details, see []
The Reuters-Jefferies CRB index <.CRB>, a global
commodities benchmark, fell about 1.9 percent on Tuesday in its
sharpest one-day decline in a month as raw materials markets
came under pressure from a sell-off in oil.
U.S. stock indexes. meanwhile, slid 1 percent as oil prices
sank and aluminum company Alcoa's leaner-than-expected revenue
started the earnings season on a disappointing note.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Commodity prices versus 2008 highs:
http://r.reuters.com/sys88r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
The euro was another big mover, rising to a fresh 15-month
high against the dollar above $1.45, boosted by reported buying
from China and news the world's second largest economy was
willing to purchase more Spanish debt.
The euro's break above $1.45 was a bullish signal, which
could open a test of $1.4550 and $1.4580. Both levels are said
to be lined with option barriers.
"The greenback's inability to bounce today means that a
further weakness is a clear and present risk and a further
decline is possible in coming days," said Nick Bennenbroek,
head of currency strategy at Wells Fargo in New York.
Earlier the euro surged to $1.4518, its highest since
mid-January 2010, according to electronic trading platform EBS.
By afternoon New York trade it had come off its peaks, trading
up 0.4 percent on the day at $1.4484 <EUR=EBS>.
The China news also helped drive Spanish yields. Spanish
10-year yields have fallen to 5.18 percent on Tuesday from a
recent high of 5.55 percent on March 10.
For the China news, click on [].
Citi's Fitzpatrick thinks the euro could pull back a little
bit from $1.45.
"We do have come a long way for a very short period of
time. Maybe at this stage, we have gotten a little bit
overextended and we could go back to $1.40, but probably not
much lower," Fitzpatrick said.
But he added that the overall positive bias on the euro
remained intact, and Citi's forecast is for the euro to rise
above $1.50 and settle at around $1.4850 by year-end.
The U.S. dollar fell 1 percent to 83.76 yen <JPY=>, near
technical support at its 200-day moving average just below
83.50.
The yen rose for a fourth straight session against the
dollar, partly retracing 10 consecutive days of losses. The
Swiss franc also advanced for a fourth straight day against the
greenback. The dollar fell 1.1 percent against the Swiss franc
<CHF=EBS> to 0.89640. It earlier dropped to 0.89446, its lowest
in more than three weeks.
(Additional reporting by Gertrude Chavez-Dreyfuss, Editing by
Chizu Nomiyama)
