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TOKYO, Apr 3 (Reuters) The yen fell on Monday after the Bank of Japan's tankan survey showed a slight deterioration in business sentiment among big manufacturers in Japan.

The yen also came under pressure as Japanese investors rushed to buy high-yielding currencies such as the Australian and New Zealand dollars at the start of their new business year.

In early Tokyo trade the dollar rose as high as around 118.20 yen from around 117.65 yen just before the tankan landed and compared with 117.70 yen in late U.S. trade on Friday.

The euro rose half a yen to around 142.95 yen. The single European currency slipped to $1.2100 from around $1.2120.

Some traders said that yen-selling against high-yielding currencies was the main driver of the market.

''It's little to do with the tankan. It's largely due to Japanese investors' buying at the beginning of the new year,'' said a trader at a Japanese bank.

The tankan survey's headline diffusion index (DI) for big manufacturers' sentiment was plus 20, just below a reading of plus 21 in December and also below the market's median forecast of plus 23, prompting selling of the yen.

But the overall picture of the economy as presented by the survey was hardly alarming, with the sentiment index for large on-manufacturers rising.

The big manufacturers' DI was also seen improving in June, helping to boost Japanese share prices to six-year highs and driving down the price of Japanese government bonds.

''Although the corporate view on the economy was a bit more cautious than expected, there's nothing that indicates the Bank of Japan will not be able to raise rates in the future,'' said Etsuko Yamashita chief economist at Sumitomo Mitsui Banking Corp.

''I think there will be only a short-term reaction in the forex market,'' she added.

The Australian dollar erased early losses against the U.S. dollar to stand at $0.7160, little changed on the day. The New Zealand dollar rose about 0.2 percent to $0.6160 REUTERS AD RN0705