* Risk aversion and repatriation flows boost yen
* Ratings agency comments weigh on sterling, euro
(Recasts, updates prices, adds comment)
NEW YORK, March 9 (Reuters) - The safe-haven yen gainedbroadly on Tuesday amid Japanese repatriation flows and a risein risk aversion on concerns peripheral euro zone economiescould face debt problems similar to those of Greece.
Appetite for risk had been boosted by Friday"s better-than-expected U.S. employment report, pushing the yen down totwo-week lows versus the euro and the dollar.
But the change in sentiment on Tuesday after comments fromFitch Ratings on Portugal"s austerity measures prompted acomeback for the yen. The dollar was supported after China saidit was committed to buying U.S. Treasuries.
"The combination of today"s risk-averse trading andrepatriation of yen have been the key drivers over the last 12hours," said Camilla Sutton, currency strategist at ScotiaCapital.
Traders said Japanese exporters were in the market buyingyen fairly actively, with further demand for the Japanesecurrency likely in the run-up to fiscal year-end on March 31.
"The feeling is that we are beginning to see fiscalyear-end repatriation flows for Japan. I think the yen willremain in favor over the next few weeks as Japanese corporatesbring money back home," said RBC currency strategist Adam Cole.
Further yen gains could however be limited by speculationthat the Bank of Japan may take additional steps to easemonetary policy. The BOJ is in the spotlight after the Nikkeinewspaper reported on Friday that the central bank wasexamining easing again and may decide on such a move when itmeets on March 16-17.
Midway through New York trade, the dollar/yen JPY= wastrading down 0.5 percent at 89.81 yen.
The yen was up 0.5 percent against the Canadian dollarJPYCAD=R, 0.9 percent against the Swiss franc JPYCHF=R, 1percent against the euro JPYEUR=R and 1.1 percent against thepound JPYGBP=R.
Higher-yielding currencies such as the Australian dollaralso fell against the Japanese currency. Aussie/yen AUDJPY=Rslipped 0.2 percent.
DOLLAR UP
The dollar index .DXY, a non traded calculation of thedollar"s performance against a basket of currencies, was up 0.3percent at 80.649.
China, the world"s biggest holder of foreign exchangereserves, renewed its commitment to the U.S. Treasury market onTuesday but said it would be wary of substantially boosting itsgold holdings [ID:nSGE628044].
"If China is not diversifying their reserves into gold,then there is no realistic alternative to absorb their demandoutside of U.S. dollars," said Kathy Lien, Kathy Lien, directorof research at GFT in New York.
The pound was under widespread pressure, dropping to aone-week low versus the dollar GBP= after ratings agencyFitch said Britain"s sovereign credit profile had deteriorated.[ID:nWEB4580]
Earlier, a Moody"s Investors Service report saying Britainfaces a difficult balancing act in deciding how and when toreduce support for the banking sector had also weighed on thepound. [ID:nLDE6271OB]
Against the dollar the pound was down around 0.5 percent at$1.4980.
The euro was down around 0.4 percent against the dollarEUR= at $1.3579, continuing to struggle in the face of debtconcerns in euro zone countries such as Greece and Portugal.
Fitch Ratings said on Tuesday it still has a negativeoutlook on Portugal"s AA ratings and was studying the detailsof the country"s new austerity measures announced a dayearlier. [ID:nWEB4632].
"Even though Fitch also stated that the contagion risk toPortugal and Spain from Greece is not great, there aresufficient worries in the market concerning EMU to keep theeuro "on the back foot", said FOREX.com analysts in a note.
Greek Finance Minister George Papaconstantinou said onTuesday in Washington the country was taking necessary steps toget its budgets under control but said the issue was also aEuropean one. [ID:nWEN1451].
Greece has been a drag on the euro in 2010, which has lost5.1 percent against the dollar so far this year and 8.4 percentagainst the yen. (Additional reporting by Neal Armstrong in London) (Reporting by Nick Olivari; Editing by Andrew Hay)
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