By Jessica Mortimer LONDON (Reuters) - The yen rose broadly on Thursday, while the dollar gained against the euro and perceived higher risk currencies as caution ahead of some key U.S. corporate earnings left investors more averse to risk. Earnings releases are due from JPMorgan (JPM.N: Quote, Profile, Research) on Thursday, followed by Citigroup (C.N: Quote, Profile, Research), General Electric (GE.N: Quote, Profile, Research) and Bank of America (BAC.N: Quote, Profile, Research) on Friday, and weakness in any of these results could dent hopes for a global economic recovery. This helped boost demand for the yen and the dollar, which typically gain in times of heightened risk aversion, to the detriment of currencies seen as high risk such the Australian dollar and sterling, which all gained earlier this week. Analysts added that some traders took news of bailout talks ending between the U.S. government and CIT Group (CIT.N: Quote, Profile, Research), a major lender to small and mid-sized U.S. firms, as an excuse to take profits on those recent gains. This weighed on the Australian dollar and sterling, while the New Zealand dollar fell particularly sharply as it came under additional selling pressure following a Fitch downgrade of New Zealand's sovereign outlook to negative. "The market is very nervous about the U.S. earnings this week and next, plus fears about the CIT issue encouraged people to take some profit on risky currencies," said Maurice Pomery, managing director at Strategic Alpha. "There are only two trades in FX markets at the moment - risk on and risk off," he said. Some encouragement came out of China, however, with data showing the country's economy grew 7.9 percent in the second quarter from a year earlier, above expectations and boosting hopes for a recovery in the global economy. At 0958 GMT, the dollar had fallen 0.6 percent against the yen to 93.72 yen, while the euro was down 0.7 percent at 132.02 yen. Against the dollar, the euro fell 0.1 percent to $1.4086, sterling fell 0.2 percent to $1.6392 and the Australian dollar lost 0.5 percent to $0.7994. This helped push the dollar index up 0.2 percent to 79.494 .DXY after it fell to a one-month low around 79.291 on Wednesday. Attention later Thursday will turn to the release of U.S. jobless claims data at 1230 GMT and the Philly Fed index at 1400 GMT (10 a.m. ET). Analysts said currency markets showed limited reaction to Wednesday's U.S. Federal Reserve minutes, which showed policymakers bumped up forecasts for economic activity both this year and next, but also sharply raised projections for unemployment. "Short term, news from the US financial sector are likely to drive markets again today without providing a clear direction though," Commerzbank strategists said in a note to clients. "While JPMorgan's Q2 results could be pointing toward a recovery of the sector, the likely end of CIT Group, a U.S. finance group for medium-sized companies, is bad news," they said. The New Zealand dollar tumbled by 1 percent to $0.6427 after the Fitch outlook downgrade on New Zealand, where it cited a lofty current account deficit and higher foreign debt levels. The news came as data showed New Zealand inflation easing to its lowest level in nearly two years, reaffirming expectations the central bank will keep interest rates at record lows well into next year. (Reporting by Jessica Mortimer; Editing by Victoria Main)

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