FOREX-Yen on defensive, euro firm as Ukraine anxiety ebbs for now

* Yen continues to lose safe-haven glow

* Focus on Putin speech later in session

* U.S. CPI, housing-related data awaited

By Shinichi Saoshiro

TOKYO, March 18 (Reuters) - The safe-haven yen was on the defensive and the euro stood firm in early trade on Tuesday as anxiety over the Ukraine crisis ebbed for the time being.

Economic sanctions imposed by the United States and the European Union against Russia following Crimea's weekend vote to join Moscow were seen as too modest to dramatically escalate near-term tensions over the former Soviet republics - reducing demand for flight-to-safety currencies such as the yen and the Swiss franc.

The dollar edged up 0.1 percent to 101.88 yen JPY= , pulling further away from a recent trough near 101.20 yen hit on Friday, helped by a rise in U.S. Treasury yields as safety demand for government debt receded. Bond yields fall as prices rise.

The euro stood at $1.3927 EUR= , within reach of a 2-1/2-year high around $1.3967 hit Thursday on diminished expectations of easing by the European Central Bank.

After Sunday's referendum in Crimea in which an overwhelming majority of voters chose to join Russia, the United States and European Union on Monday imposed personal sanctions on Russian and Crimean officials involved in the seizure of Crimea from Ukraine.

"In immediate focus is Russian president Putin's speech later today. If he plays down an immediate annexation of Crimea by Russia, the dollar could gain further ground on unwinding of risk aversion," said Masafumi Yamamoto, chief strategist at Praevidentia Strategy in Tokyo.

"But an expression of desire for a swift annexation and retaliation against sanctions placed by the European Union and the United States will rekindle economic fears, driving U.S. government bond yields lower and weighing on the dollar," he said.

President Vladimir Putin on Tuesday will address a special joint session of Russia's State Duma, or parliament, which could take a decision on annexation of the majority ethnic-Russian region. News Search ID:nL6N0ME0TR

With Crimea seemingly set to split from Ukraine, market players are watching eastern Ukraine and the possibility of Moscow's involvement in the region with a large population of Russian speakers.

With Russia's armed forces holding war games near the border and Moscow threatening to intervene to halt violence against Russians in Ukraine, some fear Putin will not stop at Crimea and may try to grab more territory in the east and south.

News Search ID:nL6N0ME1WK

Market players said any re-emergence of tensions would support the yen and Swiss franc.

Against the Swiss franc, the dollar traded at 0.8734 , pulling further away from a 2-1/2-year low of 0.8696 hit last week as investor risk aversion ebbed for the moment.

The dollar index, a measure of the greenback's value against six major currencies, was at 79.376, edging up from a four-month low of 79.268 hit last week.

Investors will watch the U.S. consumer price index and housing-related dated due later in the session for clues to the dollar's likely direction.

(Editing by Eric Meijer)

((shinichi.saoshiro@thomsonreuters.com)(Reuters Messaging: shinichi.saoshiro.reuters.com@reuters.net))

Keywords: MARKETS FOREX/