INTERVIEW-UPDATE 1-Nippon Life ready to buy unhedged bondS

* Nippon Life says has room to raise unhedged foreign bonds

* Fiscal woes in euro zone so far had little impact on plan

* Plans to raise holdings of Asian shares (Adds background)

By Satomi Noguchi and Yuka Obayashi

TOKYO, Feb 8 (Reuters) - Japan's Nippon Life Insurance Co, which slashed its unhedged foreign bond holdings in 2009, said on Monday it could buy euro zone bonds without currency hedging with the euro at about 120 yen.

Nippon Life, the nation's biggest life insurer by assets, said it did not own Greek bonds and that fiscal woes in the euro zone were not affecting its investment plans so far, because its investment was limited to major economies.

The company, which manages 46 trillion yen ($515 billion) in assets, said it plans to increase its investment in Asian shares to take advantage of high growth in the region in the long run.

"Our basic investment stance was to sell unhedged foreign bonds when the yen was weak so we can move (to buy) when the yen advances," said Sadao Kato, a senior managing director at Nippon Life.

"That means we are now in a position that we can buy (unhedged euro bonds) with the euro/yen rate around 120 yen, after slashing them by a large amount," Kato said.

The company said last October it expected the euro to fall as far as 115 yen and the dollar to move between 80-100 yen in the fiscal year ending on March 31.

It said at the time it would buy back some of its unhedged foreign bonds sold in the six months to September if currency market volatility settled and the risk of a stronger yen receded.

The euro was trading at 121.80 yen on Monday, after hitting its lowest in a year on Friday at 120.70 yen, while the dollar stood at 89.30 yen.

Nippon Life had 1.67 trillion yen, or 4 percent, of its assets invested in unhedged foreign bonds and 4.45 trillion yen, or 10 percent, invested in hedged overseas bonds as of September.

Japan's nine top life insurers held around $1.6 trillion in assets as of September -- about the size of Brazil's economy -- and their overseas bond investment moves are watched closely by the currency market.

Lower hedging costs, or a narrower spread between Japanese and overseas short-term interest rates, encouraged the top firms including Nippon Life to move aggressively into hedged foreign bonds last year to take advantage of higher yields abroad.

Dai-ichi Mutual Life Insurance Co, the nation's second-largest life insurer by assets, said last week it would start to unhedge U.S. bond holdings when the cost of hedging against currency risk, which is currently zero, increases potentially later in the year.

Nippon Life started to work with Schroders, a British fund manager, late last year to strengthen its investment base in Asia and Europe.

Nippon Life had overseas business relations mostly in the United States.

But it seeks markets in Europe and Asia for more business growth, with the domestic life insurance market capped by Japan's declining birthrate and ageing population. ($1=89.26 Yen) (Writing Satomi Noguchi; Editing by Michael Watson)