* Risk off on radiation catastrophe fears in Japan
* Yen, Swiss franc, dollar gain as investors seek safety
* Higher yielding currencies fall, AUD falls 2 pct vs USD
* FOMC meeting ahead; could support dlr/yen longer term
(Recasts, adds comment, details, updates prices)
NEW YORK, March 15 (Reuters) - The yen jumped against
higher-yielding currencies on Tuesday as investors sold riskier
assets on fears of slowing Asian economic growth in the wake of
the Japanese earthquake, tsunami and nuclear crisis.
Safer currencies such as the Swiss franc and U.S. dollar
found support from hedge funds and Japanese retail investors
while stocks and commodity prices fell sharply.
While Japan's economy will suffer because of the recent
catastrophe, other economies that were relying on accelerating
global growth will suffer more. Safety is relative.
The higher-yielding Australian dollar <AUD=D4> fell more
than 2.0 percent against the U.S. dollar, while the New Zealand
<NZD=D4> and Canadian dollars <CAD=D4> also tumbled.
"With the threat of a major nuclear disaster unfolding, the
Nikkei suffered its third steepest drop in history," said
Camilla Sutton, senior strategist at Scotia Capital in Toronto.
"Foreign exchange markets are shedding risk, with the dollar,
Swiss franc and yen all gaining ground."
The U.S. dollar was down 0.9 percent at 80.91 yen <JPY=EBS>
on electronic trading platform EBS, not far from its record low
of 79.75 struck in 1995. The dollar also fell to a record low
against the Swiss franc <CHF=EBS> of 0.9164 francs on EBS.
The yen earlier earlier trimmed some of its gains as a
100-basis-point drop versus the dollar spurred vague talk of
yen-selling intervention by Japanese authorities. Traders later
said there was no intervention, but they were wary Japan may
act to stem a sharp yen rise, especially if the dollar were to
fall below 80 yen.
"It seems fairly clear right now that neither the BoJ nor
the government want to see currency instability and will
undoubtedly be prepared to intervene to prevent significant
declines in the dollar," said Michael Woolfolk, senior
strategist at BNY Mellon in New York. "We think the line in the
sand is at 80 yen. If we fall to there, they will come in."
The yen had gained partly on expectations Japanese insurers
and companies will repatriate funds to help pay claims and
reconstruction costs.
Japan faced a potential catastrophe after a nuclear power
plant exploded in the aftermath of Friday's earthquake and sent
low levels of radiation floating towards Tokyo. For more see
[].
Also tempered by risk aversion, the euro was down 0.2
percent at $1.3963 <EUR=EBS> on EBS and 0.9 percent against the
yen <EURJPY=EBS>. However, losses may be limited due to
expectations the European Central Bank could raise rates next
month.
The Australian dollar slid to a nine-week low of $0.9815
against the U.S. dollar <AUD=D4> and a four-and-a-half-month
low of 79.23 yen <AUDJPY=R>, according to Reuters data.
Japan is Australia's second-largest export destination and
in the short term, a drop in trade receipts will hit Australian
growth, said UBS in a research note.
FED MEETING EYED
Some analysts said yen gains may be limited as repatriation
flows are offset by other factors.
"Foreign investors are heavily invested in Japanese stocks
and for the moment that's leading to yen outflows which is
helping to compensate for the expectation of yen repatriation,"
said Manuel Oliveri, currency strategist at UBS in Zurich.
One event that could lend some support to the dollar
against the yen over the longer term is a U.S. Federal Reserve
policy meeting ending later on Tuesday. []
The Bank of Japan is even more dovish than the Fed, which
has been cautious about seeking to exit its stimulus policy.
The BOJ said on Monday it would increase the size of its
asset purchase to 10 trillion yen and analysts think it may
take more steps if the economic outlook deteriorates further.
Implied volatilities in dollar/yen were still higher, with
the one-month <JPY1MO=> around 13.7 percent compared to 9.0
percent before the earthquake hit. Volatilities were still low
compared to levels above 30 percent seen around the peak of the
global financial crisis in 2008.
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For an illustration of nuclear accidents click:
http://graphics.thomsonreuters.com/11/03/GLB_INES0311_SC.gif
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(Reporting by Nick Olivari; Additional reporting by Steven C
Johnson; Editing by James Dalgleish)
