* Dollar hits 3-mth high vs yen; recovers a little vs euro
* Japanese investors seen looking for returns abroad in Q2
* Kiwi falls after IMF says it is overvalued
(Adds quotes, updates prices, changes dateline, prvs TOKYO)
By Jessica Mortimer
LONDON, April 1 (Reuters) - The dollar hit a three-month high against the yen on Thursday on talk Japanese investors will look for higher returns abroad as the new fiscal year begins.
Many expect a pick-up in Japanese investor demand for foreign currencies, higher risk appetite, expectations U.S. Treasury yields will rise, and widening rate differentials over Japanese government bonds will weigh further on the yen.
The dollar also recovered from a one-week low versus the euro as investors awaited U.S. jobs data on Friday which is expected to show a rise in non-farm payrolls. <ECONUS>
The euro was helped on Wednesday by data showing an unexpected fall in U.S. ADP private payrolls, suggesting Friday's data could come in below forecasts for the U.S. to have added 190,000 jobs in March. [ID:nN31218176]
"The disappointing ADP data helped euro/dollar as expectations for non-farm payrolls have come down a bit, but they are still forecast to show a rise and the Greek story continues to weigh on the euro," said Youna Park, strategist at Commerzbank in Frankfurt.
An ISM survey on U.S. manufacturing activity at 1400 GMT on Thursday is also expected to show an improvement in March.
At 0754 GMT, the euro <EUR=> was down 0.1 percent at $1.3496, off an earlier one-week high of $1.3561, according to Reuters data. The dollar index <.DXY> was steady at 81.065.
Greek government bonds came under pressure on Wednesday after Moody's cut the credit ratings of five Greek banks. [ID:nLDE62U1JZ]
Pimco, the world's largest bond fund, said on Thursday it considered Europe's actions on Greece were ineffective in fixing the heavily-indebted country's problems. [ID:nTPU002301]
YEN FALLS; KIWI LOWER
The dollar hit a three-month high of 93.73 yen <JPY=>, Reuters data showed, with traders saying sentiment towards the yen is turning bearish heading into the new quarter.
Traders see the next major resistance around its early January high of 93.78 yen and say a daily close above 93.80 yen would be bullish for the dollar and could take it past 95.00 yen in the near term.
"There is a risk that dollar/yen will reverse its recent gains, but the price action suggests the dollar's downside looks very limited," said Masafumi Yamamoto, chief FX strategist at Barclays Capital in Japan.
The Bank of Japan's tankan survey showed Japanese business sentiment improved in March to its highest level since September 2008, but the yen took the report in stride as it nearly matched expectations. [ID:nTOE61E037] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Insider Tankan comment link.reuters.com/bez95j ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
"It looks like rising risk appetite is still negative for the yen," Commerzbank's Park said.
The New Zealand dollar fell, trading down 0.6 percent at $0.7060 <NZD=D4> after the International Monetary Fund said the currency was overvalued by 10-25 percent. [ID:nN31245977]
Sterling gained, hitting a five-week high against the euro of 88.55 pence <EURGBP=D4>, with traders citing an opinion poll showing the opposition Conservatives could gain a majority in the upcoming election, diminishing UK political uncertainty.
The Swiss franc hit 1.4187 francs per euro <EURCHF=R>, its firmest since the euro was launched in 1999 after a strong reading of the Swiss purchasing managers' index. [ID:nZAT010793]
(Additional reporting by Satomi Noguchi in Tokyo)