FOREX-Yen extends broad slide as stocks rebound

TOKYO, March 15 (Reuters) - The yen extended a broad slide against major currencies on Thursday after a recovery in U.S. and Japanese stock markets alleviated fears that more investors may cut back on risky positions in their portfolios.

A 1.45 percent climb in Nikkei share average .N225 helped keep the yen under pressure as market players cautiously returned to selling low-yielding currencies like the yen for higher-yielding currencies and assets in carry trades.

Worries about a sharp slowdown in the U.S. economy on mounting troubles in the mortgage and housing market have prompted many investors to pare back risky positions, including holdings of stocks and carry trades financed with the yen.

But the rebound in U.S. stocks, particularly in financial-related shares that have been hard hit in the sell-off that began in late February, helped to soothe nerves.

"The risk reduction prompted by concerns about a credit crunch from the shaky U.S. subprime mortgage market has run its course, and that's why the yen has been sold broadly again," said Minoru Shioiri, senior manager of FX trading at Mitsubishi UFJ Securities.

"But worries about the health of the U.S. economy are still there to cap the dollar's gains," Shioiri said.

The dollar inched up to 117.20 JPY=, up slightly on the day from near 117.05 in late New York trade, recovering more than 1 percent from the overnight low of 115.76 yen. The U.S. currency rose as high as 117.58 yen in early trade.

The euro rose to 155.00 EURJPY=R, having pushed up from a low of 152.67 yen hit the previous day. The single currency was little changed at $1.3222 after edging up to a peak $1.3246 EUR= on Wednesday.

The Australian dollar reacted little to the robust domestic jobs data, showing the creation of a solid 22,000 new jobs in February. The Aussie AUD= eased to $0.7860, after peaking around $0.7875 earlier in the session, but held gains against the yen at 92.10 yen AUDJPY=R. The Aussie rose more than 2 percent against the yen in the previous session.

Traders said active speculators were exaggerating the yen's choppy price action against major currencies, while other market players had a wait-and-see attitude.

Sterling, one of the most volatile currencies in the recent carry trade shake-out, rose more than 2 percent to trade at 226.80 yen GBPJPY=R after falling close to 2 percent on Wednesday.

U.S. FUNDAMENTALS

Fears that U.S. economy may be slowing have been thrown into the spotlight by the subprime mortgage market, where a number of lenders to high-risk borrowers have gone bankrupt because of rising defaults.

Investors expect uncertainty over risk reduction may not go away for a while, and the global market remains unstable.

"The current unwinding has further room to run, as sentiment remains risk averse and troubles in the subprime mortgage market continue to haunt markets," currency analysts at Morgan Stanley said in a note to clients.

Cautious investors are awaiting U.S. economic indicators due out later in the session, including the producer price index for February, the New York Federal Reserve's manufacturing survey for March and the Philadelphia Fed's business activity survey for March.

In addition, former Fed Chairman Alan Greenspan is scheduled to speak in Florida at a Futures Industry Association conference.