* Yen falls to over 7-month low versus dollar of 80.39 yen

* Repatriation flows seen dampening dollar gain versus yen

* Euro zone services PMI disappoints, Greece concerns persist

* Sterling falls after BoE minutes

By Julie Haviv

NEW YORK, Feb 22 (Reuters) - The yen tumbled to its lowest level against the dollar in over seven months on Wednesday, weighed by recent monetary easing in Japan, a rise in oil prices and interest rate differentials.

The euro was little changed against the greenback as market participants weighed the implications of Greece's bailout deal and the ramifications of a euro zone economy that is teetering on the brink of a recession.

The yen has been on the defensive since the Bank of Japan's surprise move to boost its asset buying program last week. The BoJ also set an inflation target, a move that could set the stage for more asset purchases, or quantitative easing, by the central bank.

Some analysts said the fall in the yen could mark the end of its long-term uptrend that prompted Japan to intervene in the currency market three times last year.

"We are looking at a sea change in the strength of the yen," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey.

"Japanese life insurers have been removing their hedges since last week and that is putting pressure on the yen," he said. "The Bank of Japan's movement to inject additional QE has been weighing and its setting of an inflation target sets the stage for even more QE."

The drop in the yen has also been mirroring rising yields in U.S. Treasury securities, at the short end in particular. A rise in oil prices to a nine-month high also weighed on the yen.

"Japan lost a great deal of nuclear power after last year's earthquake, so the rise in oil prices is also a factor," Dolan said.

The dollar hit a peak of 80.39 yen, according to Reuters data, its highest since mid-July, with traders citing buying by Japanese importers and offshore players. This took it beyond highs hit in October and August after Japanese authorities acted to curb yen gains. The dollar last traded at 80.28 yen, up 0.7 percent on the day.

The currency pair is exhibiting its longest running uptrend in almost a year.

"Over the past few weeks we have seen a steady rise in U.S. yields, which has helped to create demand for U.S. dollars," said Kathy Lien, director of currency research, at GFT Forex in Jersey City, New Jersey.

"At the same time, the Bank of Japan's recent increase in monetary stimulus killed demand for the Japanese yen," she said. "However, traders need to be careful because the rally in USD/JPY reflects a shift in interest rate expectations."

In addition, the end of Japan's fiscal year next month, a period that typically sparks demand for yen as Japanese firms repatriate their funds, could change the trend.

"Repatriation activity could halt the rally in USD/JPY," Lien said.

The euro also gained against the yen and was last up 0.8 percent at 106.32 yen.

Comments from a Japanese Ministry of Finance official that there was still a risk of the yen rising and that Japan would continue to monitor currency moves carefully and would respond as needed added to broad yen weakness.

DANGER OF EURO ZONE RECESSION

Against the dollar the euro was little changed, investors continued to weigh the long-awaited Greek bailout deal reached early on Tuesday against concerns about economic growth and implementation risks of the deal.

The euro was last up 0.1 percent at $1.3248, below Tuesday's high of $1.3293, its highest level since Feb. 9. Since late January the euro has traded in a range roughly between $1.30 and $1.33.

Surveys of purchasing managers released on Wednesday indicated the euro zone economy is in danger of tipping into recession, with Germany, Europe's biggest economy, unexpectedly weak along with France. The survey showed contraction in the services sector this month along with manufacturing.

But the euro rose to a two-month high against sterling as the UK currency fell after Bank of England minutes showed two votes for larger asset purchases this month, increasing the risk of more easing later this year.

---

Please login to post comments or replies