* Yen retains most gains as investors shun risks
* Japan exporters expected to sell USD, euro before March-end
* Euro edges higher on short-covering ahead of weekend
* Hedge funds seen buying euro vs dlr and yen -trader
By Rika Otsuka
TOKYO, Feb 26 (Reuters) - The yen dipped on Friday but held
on to the bulk of its gains from the day before, as doubts about
the pace of a global economic recovery and persistent worries
about sovereign debt problems in Greece kept investors away from
riskier currencies.
The euro rose against the yen on short-covering in the wake
of its slide to a one-year low against the Japanese currency on
Thursday, while the dollar was supported against the yen by
Japanese importer demand ahead of the month-end.
But traders said the yen may extend its rally in the near
term as Japanese exporters are expected to sell foreign
currencies to repatriate their overseas profits before Japan's
financial year ends on March 31.
"In addition to risk aversion moves triggered by concerns
about Greece's debt problem, repatriation from Japanese firms is
definitely behind the yen's strength," said a senior trader at a
European bank.
"It's quite understandable that anyone who needs to sell
foreign currencies that they are holding would try to do so
before the yen rises further, especially ahead of a big event
like next week's U.S. jobs."
The euro rose 0.5 percent against the yen from late U.S.
trade on Thursday to 121.32 yen <EURJPY=R>, having bounced off a
one-year trough of 119.66 yen hit on trading platform EBS on
Thursday.
But traders said the gains in the euro were largely due to
short-covering ahead of the weekend.
In terms of flows, hedge funds were seen buying the euro
against the dollar and the yen, said a trader for a major
Japanese bank, adding that there was also talk of euro buying
against the yen by Japanese investors.
Technical charts show the European single currency is still
on a downward trend, with no strong support until 112.08 yen, a
January 2009 low and its lowest since early 2002, traders said.
Sterling edged up 0.1 percent from late U.S. trade to $1.5278
<GBP=D4>, having tumbled to a 9-month low on Thursday, hurt by
dismal fundamentals in the UK. [].
Against the yen, sterling inched up 0.2 percent to 136.31 yen
<GBPJPY=R>, having hit a 11-month trough just below 135 yen the
previous day.
The dollar rose 0.2 percent to 89.27 yen <JPY=>, with near
term support seen around 88.55 yen, its 2010 low hit earlier this
month. The dollar slid over 1 percent on Thursday, falling as far
as 88.80 yen on EBS, a three-week trough.
The dollar index <.DXY> dipped 0.3 percent to 80.580, with
near-term support at around 80.08, this week's low. Investors'
focus now turns to U.S. economic reports on fourth-quarter gross
domestic product, consumer sentiment for February and existing
home sales for January, all scheduled for Friday. <ECONUS>.
U.S. data of late has been on the softer side. On Thursday,
it showed core durable goods unexpectedly fell in January, while
applications for jobless benefits rose again last week.
[]
The euro rose 0.3 percent to $1.3587 <EUR=>, having bounced
from a low of $1.3451 on Thursday, which was not far from its
nine-month trough of $1.3443 hit on EBS on Feb. 19.
But traders cautioned against reading too much on the move
and said despite the bounce, sentiment towards the single
currency remains negative.
"For now euro rallies should remain fragile and lower lows
achieved," Westpac said in a note. "Naturally this provides us
with support for our long dollar index position, targeting 82.0.
We readily concede that the Greek tragedy is playing a vital role
in the position's success at the moment."
Concerns over Greece and other peripheral euro zone
countries' ability to pay their debts have driven the euro down
more than 10 percent versus the dollar from its December highs.
(Additional reporting by Masayuki Kitano and Anirban Nag in
Sydney; Editing by Edwina Gibbs)
