FOREX-Dollar hits 3-week high vs yen as stocks rally
* Yen tumbles as rising stocks, weak data weigh
* Dollar hits more than three-week high above 99 yen
* Euro rises vs dollar, but gains limited ahead of ECB (Updates prices; adds details, comments, changes byline)
By Wanfeng Zhou
NEW YORK, March 31 (Reuters) - The U.S. dollar rose to a more than three-week high versus the yen on Tuesday as gains in stock markets worldwide and weak economic data out of Japan dampened safe-haven flows into the Japanese currency.
The yen, which advanced a day earlier as risk aversion and year-end pressure prompted Japanese investors to bring money home, reversed course as traders closed the books on the fiscal year.
"It seems yesterday's (stock market) sell-off was quite short-lived and investors are once again loading up on riskier assets and currencies," said Robert Blake, senior currency strategist at State Street Global Markets in Boston.
A spike in Japanese unemployment also put pressure on the currency, analysts said. For details, see [ID:nSP454873]
The dollar rose to as much as 99.36 yen JPY=, the highest level since early March, according to Reuters data. It was last up 2 percent at 99.21 yen, putting it on track for a 9.5 percent gain in the first three months of the year, the yen's worst quarter since 2001.
Ahead of a closely watched G20 meeting in London on Thursday, data showed the global financial crisis has devastated Japanese exports and led to a sharp economic contraction in the fourth quarter, leaving Prime Minister Taro Aso's government vulnerable to collapse.
"Fiscal year-end had been holding people back from selling yen. But the fundamentals are absolutely horrendous, there's policy gridlock, and this lets Japanese investors continue to invest money abroad in droves," said Samarjit Shankar, global FX strategy director at The Bank of New York-Mellon in Boston.
Wall Street clawed back some losses in the previous session caused by bankruptcy fears for General Motors GM.N and Chrysler.
The euro also jumped 2.3 percent to 131.42 yen EURJPY=, off Monday's two-month low beneath 127 yen. It rose a modest 0.3 percent to $1.3244 EUR=, and was on track for a loss of 5.2 percent this quarter.
Gains in the euro were limited as investors awaited the European Central Bank policy meeting on Thursday.
"There's a lot of uncertainty about what the outcome of that might be and how it will affect the euro, maybe limiting flows into the euro today," Blake said.
The ECB is expected to cut rates half a percentage point to 1 percent and possibly signal plans for some form of unconventional policy such as buying bonds to boost the money supply. [ECB/INT] (Additional reporting by Steven C. Johnson; Editing by Andrea Ricci))
