LONDON, Aug 29 (Reuters) - Sterling strengthened against the euro and the yen on Wednesday after the pound suffered losses in previous sessions due to increased risk aversion.

The pound, a destination for the relatively high risk carry trade, fell on Monday and Tuesday on concerns about fallout from credit jitters that have hit financial markets in recent weeks.

It regained some ground on Wednesday as investors took profit as an absence of fresh headlines saw relative stability return to currency markets.

"There has been some profit taking after sterling's recent falls as in a choppy market you can't afford to sit on a position for long," said Neil Mellor, currency strategist at Bank of New York Mellon.

At 0731 GMT, the pound was up a third of a percent versus the yen at 229.50 yen <GBPJPY=R>. The euro was down 0.2 percent at 67.85 pence <EURGBP=>. The pound was up 0.1 percent to $2.0030 versus the dollar <GBP=>.

Further negative headlines about the credit market and heightened risk aversion could see fresh selling of the pound analysts said.

"The fear that the economy will be affected by recent turmoil in markets will continue and there will be plenty of uncertainty going ahead," said Bank of New York's Mellor.

Source supplied by: Reuters