By Naomi Tajitsu LONDON, March 16 (Reuters) - The yen steadied around a four-month high versus the dollar on Wednesday, but Japan's nuclear crisis could trigger more yen demand versus higher risk currencies, raising the prospect of intervention to stem gains. The dollar JPY= traded at 80.70 yen, just above a four-month low of 80.60 yen hit on Monday. Higher risk aversion could push up the yen, on speculation Japanese financial institutions will repatriate funds to Japan and on renewed selling of higher risk currencies, although the dollar's record low of 79.75 yen looms. "We wouldn't talk about a recovery in dollar/yen yet," said Lutz Karpowitz, FX strategist at Commerzbank in Frankfurt. "(But) we don't expect a drop under 80.00 yen because we expect the authorities to step into the market under that level." Since a massive earthquake and tsunami hit Japan on Friday, the yen has risen, partly on market speculation that Japanese insurers and companies may repatriate funds to help pay claims and reconstruction costs. [ID:nL3E7EF450] Concerns the Japanese authorities will intervene to weaken the yen have limited its upside so far. The Bank of Japan was seen checking rates on currencies with banks in Tokyo, traders said. A strong yen would deal another blow to Japanese exporters and the economy. In addition, fund managers expecting the yen to weaken in the longer term due to the recovery costs of the disaster said the yen was approaching levels that would make buying the dollar attractive. "Excellent levels to buy the dollar against the yen are imminent," said Ken Dickson, investment director of currencies at Standard Life Investments, which manages 156.9 billion pounds ($252.5 billion) in assets. "These levels are attractive as we are not convinced repatriation will strengthen the yen further," he said, while adding the firm had not been actively trading the yen this week. Traders said a U.S. bank had bought dollars ahead of 80.60 yen, offering support around that level, while stop-loss orders were seen under 80.40 yen. The Australian dollar AUDJPY=R rose 0.2 percent, clawing back ground after it hit a four-month low on Tuesday. Higher-yielding currencies like the Aussie are seen as proxies for global growth, and are often sold in times of uncertainty.

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