FOREX-Yen tumbles as Japan investors buy abroad, euro up

* Yen sells off on higher demand for overseas assets

* Better-than-expected data supports dollar vs yen

* Dollar down vs euro as risk appetite rises

* Deficit worries still nipping at dollar (Updates prices, adds detail, comment, changes byline)

By Steven C. Johnson

NEW YORK, May 28 (Reuters) - The Japanese yen fell broadly on Thursday as a spike in U.S. bond yields and surprisingly strong U.S. economic data attracted Japanese investors into overseas assets.

The dollar also remained under pressure against the euro as strong U.S. durable goods data reduced the need to hold it as a safe haven and worries about a soaring U.S. deficit left some worried that the Federal Reserve would step up debt purchases.

For story on U.S. economic data see [ID:nN28317740].

Yields on 10-year U.S. government bonds have jumped more than half a percentage point in the last two weeks, driven in part by worries about the ever-expanding amount of debt needed to fund a record $1.8 trillion U.S. budget deficit.