* Yen hits 10-mth low vs euro, 6-wk trough vs dollar
* Dlr/yen rises above 200-day MA, may target Y86-87
* Widening yield differentials driving yen lower-traders
* Aussie hits 11-mth high vs yen, near 29-yr high vs dlr
By Ian Chua and Masayuki Kitano
SYDNEY/SINGAPORE, April 1 (Reuters) - The yen slid to a 10-month low against the euro and fell below its 200-day moving average versus the dollar on Friday, poised for more weakness as widening yield differences increased the appeal of using the yen to fund investments in other currencies.
The yen came under renewed pressure after comments from a U.S. Federal Reserve official gave traders more reason to think the Fed will raise interest rates before the Bank of Japan, underscoring the diverging outlook for their monetary policies.
The BOJ will likely lag behind the Fed and the European Central Bank in raising interest rates, especially in the wake of the March 11 earthquake and tsunami that devastated Japan's northeast.
Such market expectations have stirred talk of a revival in the yen carry trade, which involves selling the low-yielding yen to fund investment in higher-yielding currencies and assets. [ID:nL3E7EV00H]
"The global economy is in relatively good shape, equities are performing solidly and volatility has been low," said Koji Fukaya, director of global foreign exchange research at Credit Suisse Securities in Tokyo.
"In this risk-on environment, there is a growing contrast in monetary policies among the G3, and that situation is likely leading to some yen carry trades," Fukaya said, adding that the dollar could rise to around 86 yen by the end of June.
The dollar rose above its 200-day moving average against the yen at 83.63 yen for the first time since June, a sign that the yen's uptrend may be coming to an end.
Since the Lehman crisis, the dollar has never risen more than 4 yen above the 200-day moving average, said Masato Chin, president of Chin Associates, adding that the next possible target for the dollar is 4 yen above its moving average.
If the dollar rises above that level it would likely signal that the yen has hit a historic peak with its rise in March, Chin added.
The dollar was up 0.5 percent to 83.56 yen . It touched a six-week high of 83.748 yen on trading platform EBS earlier, and the next major peak on daily charts is its mid-February peak of 83.98 yen.
The dollar tumbled to a post-World War Two record low of 76.25 yen in March, as the yen surged on the back of market speculation that Japanese investors may repatriate funds from abroad after the earthquake.
There has been little sign that such repatriation has taken place, and the yen later fell back after the Group of Seven industrialised nations intervened jointly to sell the yen on March 18. Japan conducted a total of 692.5 billion yen ($8.4 billion) in FX intervention in March, the Ministry of Finance said on Thursday.
YEN'S BROAD FALL
The yen fell broadly on the crosses, hitting an 11-month low against the Australian dollar and its lowest in more than 10 months against the euro.
The single European currency rose as high as 118.675 yen on trading platform EBS, the euro's highest since against the yen since mid-May 2010. The euro last stood at 118.40 yen, up 0.6 percent on the day.
The dollar gained a lift against the yen after the Wall Street Journal reported that Minneapolis Federal Reserve President Narayana Kocherlakota signaled the Fed could raise interest rates by three-quarters of a percentage point by the end of the year. [ID:nN31167243]
A recent series of hawkish comments by Fed officials have helped drive U.S. Treasury yields higher this week and caused the dollar's yield advantage over the yen to widen.
Still, not all market players are convinced that investors have regained their appetite for carry trades just yet.
Kimihiko Tomita, head of foreign exchange at State Street Global Markets in Tokyo, said there was little sign that global investors have regained their appetite for carry trades.
"What is happening now is just a reaction to the fact that the yen had been bought without much meaning," Tomita said, referring to the yen's surge in March that was partly driven by speculation about possible Japanese repatriation.
Later on Friday, focus turns to the closely watched U.S. non-farm payrolls report due at 1230 GMT. Forecasts centre on a rise of 190,000 jobs in March, a Reuters poll showed.
The Australian dollar rose 0.2 percent to $1.0346, hovering near a 29-year high of $1.0373 hit on Thursday. (Additional reporting by Hideyuki Sano and Natsuko Waki in Tokyo; Editing by Kevin Plumberg)