FOREX-Yen falls, high-yielders gain as risk in demand

* Yen weaker, high-yielding currencies up on U.S. jobs data

* Equities' rise helps cross/yen, profit-taking tempers gains

* Talk that BOJ will loosen policy weighs on yen

By Kaori Kaneko

TOKYO, March 8 (Reuters) - The yen was under pressure on Monday while demand for higher-yielding currencies was robust after better-than-expected U.S. jobs data supported optimism about an economic recovery.

The yen fell broadly, with traders citing yen-selling flows from hedge funds. Currencies such as the Australian dollar rose against the yen, getting a boost from a rise in demand for equities <.MIAPJ0000PUS> and other risky assets.

"The U.S. jobs report last week helped investor anticipation for further recovery in the next employment report and encouraged them to seek risky assets," said Mitsuru Sahara, chief manager of currency derivatives trading at Bank of Tokyo-Mitsubishi UFJ.

The yen was also weighed down by speculation that the Bank of Japan would further loosen its already lax monetary policy soon to address deflationary pressure in the economy. [nECONJP]

"Expectations for more easing steps from the BOJ after a report last week are adding to the reasons for hedge funds to sell the yen, helping yen crosses higher," said Kosuke Hanao, head of Treasury product sales at HSBC in Tokyo.

The yen weakened after the Nikkei newspaper reported on Friday that the BOJ was examining easing again and may decide on such a move when it meets on March 16-17.

Sources familiar with the matter said the BOJ is likely to debate this month easing its ultra-loose monetary policy again. [ID:nTOE6230A7]

Low interest rates mean the yen tends to fall when risk appetite rises and as investors borrow the yen to finance more lucrative trades in other currencies and assets.

The euro rose 0.5 percent against the yen from late U.S. trading on Friday to 123.65 yen <EURJPY=R>.

The euro hit a two-week high of 123.80 yen on trading platform EBS earlier on Monday, and added to its 1.6 percent jump against the yen logged on Friday.

The dollar also touched a two-week high against the yen of 90.69 yen. After trimming some gains, it was 0.1 percent higher on the day at 90.43 yen <JPY=>.

EYES ON BOJ POLICY

The most likely next step for the BOJ is to expand the fund-supply operation it put in place in December, under which it lends to banks at 0.1 percent, either by increasing the size from 10 trillion yen or extending the duration of loans from the current three months.

But traders said the market is not expecting the BOJ to come out with any additional easing measures at its policy meeting next week, given that Friday's jobs data has helped provide some respite from yen strength.

Not all were convinced that expanding the fixed-rate money market operation would do much to push down the yen.

Tohru Sasaki, chief foreign exchange strategist Japan at JPMorgan Chase, said he thought there wouldn't be any impact from such a move.

One reason is that while the BOJ's decision in December to launch the fixed-rate fund supply scheme helped push down short-term yen interest rates, the size of the move was too small to think there was much actual impact on the yen, Sasaki continued.

"When you consider how much three-month interest rates have moved, it was a microscopic change," he said.

Three-month yen LIBOR stood at 0.25 percent on Friday <JPY3MFSR=>, down roughly 5 basis points from late November, just before the BOJ unveiled the new fund injection scheme.

If anything, the yen may continue to retreat, especially against the euro and other crosses, as investors unwind long yen positions that have piled up, Sasaki said.

The Australian dollar rose 0.3 percent against the yen to 82.32 yen <AUDJPY=R>.

The euro <EUR=> rose 0.4 percent to $1.3675 helped at the margins by growing support for debt-laden Greece.

In a bid to calm markets, French President Nicolas Sarkozy promised Greece on Sunday that euro zone countries would help it overcome its financial problems and vowed a crackdown on financial speculators Athens blames for its woes. [ID:nLDE6260JZ] Traders say, near term resistance for the euro is seen around $1.3712, its March 4 high.

The dollar index <.DXY> was 0.3 percent lower at 80.231. The latest data shows currency speculators cut by more than half their long bets on the U.S. dollar in the week to March 2. [IMM/FX].

The U.S. Labor Department said the economy lost 36,000 jobs in February, leaving the unemployment rate steady at 9.7 percent. Analysts polled by Reuters expected 50,000 job cuts and a 9.8 percent jobless rate. [ID:nN04252324]. (Additional reporting by Satomi Noguchi and Masayuki in Tokyo; Anirban Nag in Sydney; Editing by Joseph Radford)