* Equity market falls prompt demand for Japanese currency
* Repatriation flows also boosting yen
* Ratings agency comments weigh on sterling, euro
(Updates prices, adds quote, detail)
By Neal Armstrong
LONDON, March 9 (Reuters) The yen gained broadly on Tuesday
as equity markets fell, prompting a pullback in risk trades and
a move into the low-yielding Japanese currency.
Risk appetite had been boosted by Friday's better-than-
expected U.S. employment report, pushing the yen down to
two-week lows versus the euro and the dollar.
But a pullback in global equity markets on Tuesday had
prompted a reversal of fortunes for the yen.
"With equities drifting lower and U.S. stock futures in the
red, the yen has made gains. Risk aversion is still swilling
around the markets," said Jeremy Stretch, currency strategist at
Rabobank.
Traders said Japanese exporters were in the market buying
yen fairly actively, with further demand for the Japanese
currency likely in the run-up to fiscal year-end on March 31.
"The feeling is that we are beginning to see fiscal year-end
repatriation flows for Japan. I think the yen will remain in
favour over the next few weeks as Japanese corporates bring
money back home", said RBC currency strategist Adam Cole.
Further yen gains could however be limited by speculation
that the Bank of Japan may take additional steps to ease
monetary policy.
The BOJ is in the spotlight after the Nikkei newspaper
reported on Friday that the central bank was examining easing
again and may decide on such a move when it meets on March
16-17.
At 1217 GMT, dollar/yen <JPY=> was trading down 0.6 percent
at 89.75 yen. The euro fell over 1 percent versus the yen
<EURJPY=R> to trade at 121.73 yen.
Higher-yielding currencies such as the Australian dollar
were also down against the Japanese currency. Aussie/yen
<AUDJPY=R> slipped 0.7 percent to 81.38 yen.
STERLING UNDER PRESSURE
The pound was under widespread pressure, dropping to a
one-week low versus the dollar <GBP=D4> after UK ratings agency
Fitch said Britain's sovereign credit profile had deteriorated.
[]
Earlier, a Moody's Investors Service report saying Britain
faces a difficult balancing act in deciding how and when to
reduce support for the banking sector had also weighed on the
pound. []
Sterling dropped close to 2 percent versus the yen
<GBPJPY=R>. Against the dollar <GBP=D4>, the pound was down
around 0.7 percent at $1.4955. The greenback gained around 0.3
percent versus a basket of currencies <.DXY>.
The euro was down around 0.5 percent versus the dollar at
$1.3588, continuing to struggle in the face of debt concerns in
the peripheral euro zone countries such as Greece and Portugal.
Fitch Ratings said on Tuesday it still has a negative
outlook on Portugal's double-A ratings and was studying the
details of the country's new austerity measures announced a day
earlier. [].
"Even though Fitch also stated that the contagion risk to
Portugal and Spain from Greece is not great, there are
sufficient worries in the market concerning EMU to keep the euro
on the back foot", said FOREX.com analysts in a note.
(Editing by XXX)
