* Liquidation of cross/yen long-positions runs its course
* Impact from China tightening move likely waning
* Long Aussie positions cut but impact seen limited
By Kaori Kaneko
TOKYO, Jan 13 (Reuters) - The yen fell against the euro and
the Australian dollar on Wednesday as investors concluded that
China's unexpected raising of banks' reserves requirement ratio
would not derail growth, returning cautiously to riskier and
higher-yielding currencies.
The yen had advanced broadly the previous day after China's
central bank surprised world markets by taking a step towards a
tighter policy, prompting investors to unwind yen selling
positions against currencies such as the commodity-linked Aussie.
China's move is the strongest step to date by its central
bank as it starts to normalise monetary policy from very loose
conditions, with an eye towards reining in surging asset prices.
But yen crosses stabilised on Wednesday after losses in
Shanghai's stock market <> following the tightening seemed
to have been contained and analysts said the Chinese central
bank's move was designed to control bank lending and prevent
speculative bubbles, helping moderate the speed of economic
growth.
"We continue to prefer being long commodity currencies versus
currencies that are maintaining quantitative easing programs such
as the yen and the Swiss franc. Any further sell-off in commodity
currencies today may provide opportunity to enter such trades,"
said analysts at Barclays Capital in a note to clients.
China's move on Tuesday had led investors to cut sizable long
positions in the Australian dollar.
Many investors had been borrowing in yen to buy a range of
assets leveraged to Chinese and global growth.
The dollar edged up 0.1 percent to 91.11 yen <JPY=>, having
lost more than 1 percent on Tuesday to as low as 90.73 yen.
The euro rose 0.2 percent to 132.08 yen <EURJPY=R>, after
having fallen 1.4 percent on Tuesday with support seen around the
131.20 yen area.
"Yesterday's fall in yen crosses was nothing more than we
often see when these volatile rates are in a correction phase. I
don't expect that to spark a series of loss-cutting selling of
other currencies against the yen," said Hideki Hayashi, a global
economist at Mizuho Securities.
The Australian dollar rose 0.4 percent to 84.02 yen
<AUDJPY=R>, after having registered its biggest daily drop in
eight weeks on the China news. Support is seen around the
83.00/20 yen level, traders said.
Mizuho Securities' Hayashi said investors find the Australian
dollar attractive at below 84 yen so the currency is unlikely to
extend its slide from the current level.
"There has been no change in the tightening stance of
Australia's central bank. That will keep lending the Aussie
support," he said.
The Aussie <AUD=D4> held above $0.9200, after it fell
more than 1.2 percent on Tuesday, with investors cutting long
positions on the slide.
The euro <EUR=> was nearly flat on the day at $1.4495,
getting some support from comments by Greek Finance Minister
George Papaconstantinou.
Worries about Greece's financial situation have weighed on
the euro in recent weeks. But Papaconstantinou told a
German newspaper on Tuesday that Greece had no more skeletons
in the closet, and had a solid basis for cutting its deficit.
[].
(Additional reporting by Anirban Nag in Sydney and Rika Otsuka
and Satomi Noguchi in Tokyo; Editing by Michael Watson)
