* Risk aversion and repatriation flows boost yen
* Ratings agency comments weigh on sterling, euro
* China"s commitment to buy Treasuries helps dollar (Adds details, updates prices)
By Vivianne Rodrigues and Nicholas Olivari
NEW YORK, March 9 (Reuters) - The yen gained broadly onTuesday amid Japanese repatriation flows, while the eurodeclined on concerns that peripheral euro zone economies couldface debt problems similar to those of Greece.
Appetite for risk had been boosted by Friday"sstronger-than-expected U.S. employment report, pushing the yendown to two-week lows versus the euro and the dollar.
Comments from Fitch Ratings on Portugal"s austeritymeasures on Tuesday, however, prompted a comeback for the yenand triggered further selling in the euro zone commoncurrency.
The dollar was supported after China said it was committedto buying U.S. Treasuries. For details see [ID:nLDE6281JZ] and[ID:nBJC002514].
"The combination of today"s risk-averse trading andrepatriation of yen has been the key driver over the last 12hours," said Camilla Sutton, currency strategist at ScotiaCapital in Toronto.
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. The yen will remain infavor over the next few weeks as Japanese corporates bringmoney back home," said RBC currency strategist Adam Cole inLondon.
In late afternoon trading in New York, the dollar JPY=was trading down 0.4 percent at 89.93 yen.
The yen was up about 0.2 percent against the Canadiandollar JPYCAD=R, 0.9 percent against the Swiss francJPYCHF=R, 0.6 percent against the euro JPYEUR=R and 0.9percent against the pound JPYGBP=R.
Higher-yielding currencies such as the Australian dollaralso fell against the Japanese currency. Aussie/yen AUDJPY=Rslipped 0.2 percent.
Analysts at the Bank of Tokyo/Mitsubishi also noted that anincentive this year with Japanese corporations not having topay the difference between local tax rates abroad and in Japanwhen funds are repatriated may play a greater role in bringingfunds home in March. But the bank cautioned the impact of theincentive on the currency may be temporary.
Further yen gains could also be limited by speculation thatthe Bank of Japan may take additional steps to ease monetarypolicy. The BOJ is in the spotlight after the Nikkei newspaperreported on Friday that the central bank was examining easingagain and may decide on such a move when it meets on March16-17.
CHINA"S COMMITMENT
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.
"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, director of researchat 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 haddeteriorated.
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$1.4990.
The euro was down around 0.3 percent against the dollarEUR= at $1.3595, 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 details ofthe country"s new austerity measures announced Monday.
"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 his country was taking necessary steps toget its budget 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 percent against the dollar so far this year and 8.1 percentagainst the yen. (Additional reporting by Neal Armstrong in London; Editing byJames Dalgleish)
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