* BOJ to boost asset buys by Y10 trln, to buy long-term JGBs

* Analysts say impact on dlr/yen may prove fleeting

* Moody’s puts UK, France, Austria on negative outlook

* Downgrades six other European nations

By Neal Armstrong

LONDON, Feb 14 (Reuters) – The yen fell on Tuesday as
the Bank of Japan eased monetary policy by expanding its
asset-buying scheme, but the impact on the currency may prove
short-lived while nagging worries over the euro zone crisis keep
it supported as a safe haven.

The BOJ boosted its asset buying and lending scheme by 10
trillion yen ($ 130 billion), to 65 trillion yen, with the entire
increase to be used for purchases of long-term Japanese
government bonds (JGBs).

The central bank also set a policy goal of consumer price
inflation at 1 percent.

The dollar rose to a near three-week high of 78.08 yen on
trading platform EBS with gains of around 0.5 percent on the
day. The euro rose 0.2 percent on the day to 102.59 yen
.

“The knee-jerk reaction has been to sell the yen and that’s
understandable with the BoJ being a bit more active than it has
been in the past,” said Lee Hardman, currency strategist at
BTM-UFJ.

“This certainly reinforces the recent yen-weakening trend
but that trend rests on broader financial market stability
remaining in place. There are still risks of a disorderly
outcome in Greece which would derail current yen weakness,” he
added.

A rally in global equity markets this year has helped to
weaken the low-yielding yen which tends to fall when risk
sentiment improves. In such an environment investors typically
use it as a funding currency to finance investments in
higher-yielding alternatives.

One key topside level for dollar/yen in the near term lies
near 78.29 yen, around its late January high and a peak hit in
late November.

“If we break above that clearly, we may see more traction on
the upside,” said Mitual Kotecha, head of global fx strategy at
Credit Agricole CIB, but he added that the resistance will
probably hold for now.

The dollar briefly probed above its 200-day moving average
at 78.05. A daily close above there for the first time since
2011 would be a clear positive sign. Support was the top of the
daily Ichimoku cloud around 77.43.

EURO KNOCKED BY MOODY’S

The euro dipped 0.2 percent to $ 1.3169 and sterling
also fell 0.3 percent to $ 1.5703, having come under
pressure after rating agency Moody’s said it may cut its
triple-A ratings of France, Britain and Austria while
downgrading six other European nations, including Italy.

Moody’s move on euro zone sovereign ratings follows action
by Standard & Poor’s last month, when France and Austria lost
their triple-A status while Italy, Spain, Portugal, Cyprus,
Malta, Slovakia and Slovenia were downgraded.

“Anyone observing the markets had to expect further rating
agency downgrades and in the end Moody’s only followed S&P’s
previous step,” said Commerzbank analysts in a note.

“Nonetheless steps of this nature always put pressure on the
euro as they draw attention to the difficulties once again.
Moreover the outlook for the downgraded countries remains
negative,” they added.

The euro had already been down about a cent from the
previous day’s high on worries about the remaining hurdles
Greece faces in its bid to avoid a disorderly default. It
extended its losses after the Moody’s announcement.

The higher-yielding Australian dollar fell 0.4
percent to $ 1.0693 as Moody’s decision knocked risk sentiment.
The U.S. dollar rose 0.3 percent versus a currency basket to
79.161.

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