FOREX-Yen gains broadly on risk aversion

* Equity market falls prompt demand for Japanese currency

* Repatriation flows also boosting yen

* Ratings agency comments weigh on sterling, euro

(Updates prices, adds quote, detail)

By Neal Armstrong

LONDON, March 9 (Reuters) The yen gained broadly on Tuesday as equity markets fell, prompting a pullback in risk trades and a move into the low-yielding Japanese currency.

Risk appetite had been boosted by Friday's better-than- expected U.S. employment report, pushing the yen down to two-week lows versus the euro and the dollar.

But a pullback in global equity markets on Tuesday had prompted a reversal of fortunes for the yen.

"With equities drifting lower and U.S. stock futures in the red, the yen has made gains. Risk aversion is still swilling around the markets," said Jeremy Stretch, currency strategist at Rabobank.

Traders said Japanese exporters were in the market buying yen fairly actively, with further demand for the Japanese currency likely in the run-up to fiscal year-end on March 31.

"The feeling is that we are beginning to see fiscal year-end repatriation flows for Japan. I think the yen will remain in favour over the next few weeks as Japanese corporates bring money back home", said RBC currency strategist Adam Cole.

Further yen gains could however be limited by speculation that the Bank of Japan may take additional steps to ease monetary policy.

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

At 1217 GMT, dollar/yen <JPY=> was trading down 0.6 percent at 89.75 yen. The euro fell over 1 percent versus the yen <EURJPY=R> to trade at 121.73 yen.

Higher-yielding currencies such as the Australian dollar were also down against the Japanese currency. Aussie/yen <AUDJPY=R> slipped 0.7 percent to 81.38 yen.

STERLING UNDER PRESSURE

The pound was under widespread pressure, dropping to a one-week low versus the dollar <GBP=D4> after UK ratings agency Fitch said Britain's sovereign credit Profile had deteriorated. [ID:nWEB4580]

Earlier, a Moody's Investors Service report saying Britain faces a difficult balancing act in deciding how and when to reduce support for the banking sector had also weighed on the pound. [ID:nLDE6271OB]

Sterling dropped close to 2 percent versus the yen <GBPJPY=R>. Against the dollar <GBP=D4>, the pound was down around 0.7 percent at $1.4955. The greenback gained around 0.3 percent versus a basket of currencies <.DXY>.

The euro was down around 0.5 percent versus the dollar at $1.3588, continuing to struggle in the face of debt concerns in the peripheral euro zone countries such as Greece and Portugal.

Fitch Ratings said on Tuesday it still has a negative outlook on Portugal's double-A ratings and was studying the details of the country's new austerity measures announced a day earlier. [ID:nWEB4632].

"Even though Fitch also stated that the contagion risk to Portugal and Spain from Greece is not great, there are sufficient worries in the market concerning EMU to keep the euro on the back foot", said FOREX.com analysts in a note.

(Editing by XXX)