* Yen falls as Japan PM Hatoyama says to resign
* Eur/dlr steady; Iran reportedly to sell euros
* Traders wary of taking on more short euro positions
* ECB's Noyer says euro not unusually low
(adds comments, updates prices)
By Jessica Mortimer
LONDON, June 2 (Reuters) - The yen fell on Wednesday after
Japanese Prime Minister Yukio Hatoyama resigned, particularly as
his likely successor has in the past taken a tougher stance in
fighting yen strength.
The yen hit a two-week low against the dollar after Hatoyama
and his deputy resigned to try to boost the ruling party's
faltering fortunes in an election next month. []
Analysts said concerns about political instability were
weighing on the Japanese currency, though the focus was on
Hatoyama's expected replacement, Finance Minister Naoto Kan,
because he has previously advocated a weak yen.
Kan surprised markets earlier this year by saying he wanted
the yen to weaken more and that most businesses favoured a
dollar/yen rate around 95 yen. Since then he has mostly toed the
finance ministry line that stable currencies are desirable and
markets should set foreign exchange levels.
"If the position does fall to Kan, then the bias will be
towards a slightly weaker yen," said Gavin Friend, currency
strategist at nabCapital.
At 1042 GMT, the dollar was up 1.1 percent on the day at a
two-week high around 92.00 yen <JPY=>, while the euro <EURJPY=R>
gained 1.2 percent to 112.37 yen.
Some analysts said yen losses were limited as investors
remained hungry for the Japanese currency, which has benefited
from risk aversion stemming from the euro zone debt crisis.
"Almost anything you throw at the yen these days is negative
and yet here we are at these levels. That tells you demand for
yen is for reasons other than what's going on in Japan," said
Simon Derrick, head of currency research at BNYM.
NOYER COMMENTS
Against the dollar, the euro <EUR=> was slightly lower at
$1.2210.
Iran's state-owned Press TV said the Iranian central bank
would sell 45 billion euros from its foreign exchange reserves
to buy dollars and gold. []
Traders said there was limited impact on the euro, and some
were sceptical about whether Tehran would be able to buy
significant amounts of dollars, given that U.S. depository
institutions are banned from processing transfers involving
Iran.
The dollar <.DXY> rose 0.4 percent against a currency basket
to 86.898, hovering near a 15-month high hit on Tuesday.
The euro took a knock earlier after European Central Bank
board member Christian Noyer was cited as saying the single
currency's exchange rate against the dollar was at around a
10-year average and "by no means an unusually low level".
[]
The euro hit a four-year low of $1.2110 on Tuesday, and
remains sensitive to any signs the euro zone sovereign debt
crisis might spread to its banking system.
However, it recovered on Wednesday after government sources
in Brazil, India, Japan and South Korea said they would not stop
investing in the currency. []
Traders also said investors were wary of renewing short euro
positions after taking a hit from the currency's sharp upswing
on Tuesday following its slide to a four-year low.
"Very few investors are ready to put on long euro/dollar
positions, and any spikes are due to profit taking on short
positions," said Niels Christensen, currency strategist at
Nordea in Copenhagen.
(Additional reporting by Naomi Tajitsu)
