* Yen slides to 9-month low vs dollar of 81.718 * Japanese deflation to keep BoJ focus on easing measures * Euro slips versus dollar post-LTRO By Neal Armstrong LONDON, March 2 (Reuters) - The yen fell to nine-month lows versus the dollar on Friday, retreating after data showed persistent negative price pressures in Japan which are likely to keep the Bank of Japan's focus on monetary easing and undermine the currency. The dollar rose around 0.7 percent to 81.718 yen on trading platform EBS after taking out Tuesday's high of 81.661 in early European trade. Japan's core consumer prices fell year-on-year for the fourth consecutive month in January, suggesting mild deflation could persist this year as lacklustre wage growth curtails domestic demand. The Japanese currency has taken a hit after the Bank of Japan's surprise monetary easing in February, while the dollar found some reprieve this week after U.S. Federal Reserve Chairman Ben Bernanke stopped short of signalling more stimulus. The dollar rose 0.4 percent versus a currency basket to 79.102. "The Japanese data is persistently deflationary and the Bank of Japan is ready to do all they can to turn inflation positive," said John Hardy, currency strategist at Saxo Bank. "But I do think dollar/yen is getting a little over-extended at these levels," he added. Traders reported yen selling by Japanese importers while next resistance was said to be the 100-week moving average around 82.19. "The only barrier in the way of yen weakness is how far it has travelled already," said Societe Generale in a note to clients. The dollar is likely to stay firm versus the yen in the near term, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corp in Singapore. "As you can see in yen crosses for example, there is now a strong trend of betting that market strains will calm down, and U.S. economic data has been recovering to some extent as well," Okagawa said. The low-yielding yen tends to come under pressure when market optimism about the outlook for global economic growth improves. That can trigger more risk-taking among investors and increase the popularity of carry trades, in which investors sell low-yielding currencies against higher-yielding currencies. Higher-yielding currencies such as the Australian dollar and Brazil's real may strengthen against the yen , Okagawa said. The euro and the Australian dollar also pushed higher against the yen, with the euro rising 0.4 percent to 108.32 yen and the Australian dollar hitting its highest level since May 2011 of around 88.00 yen at one point. News that Japanese brewer Asahi is emerging as a front-runner to buy eastern European brewer StarBev, helped lend support to the euro versus the yen, traders said. EURO/DOLLAR SLIPS Against the dollar, the euro slipped 0.3 percent to $1.3256 , its lowest in around a week, after traders said large stop-loss sell orders were triggered through $1.3270. Analysts said the European Central Bank's massive cash injection this week (LTRO) has made it more attractive to use the euro as a funding currency to buy higher yielding assets. Market players believe the cash bonanza from the ECB will ease bank funding strains and support the euro zone's sovereign bond market. That, in turn, could help spur more risk-taking among investors. But investors are also reluctant to buy the euro while worries over debt and growth cast a cloud over the region. Greece has taken action needed to secure a second bailout according to Eurogroup President Jean-Claude Juncker, but the money can only be paid out on completion of a bond swap between Athens and private investors to be concluded on March 9.

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