* Dollar slips from 6-month highs vs euro after ECB Weber
* Euro zone data eyed as Weber, others reduce rate cut view
* Oil rise, worries over US financial system weigh on dollar
* Sharp Aussie rebound pulls cross/yen higher
By Chikako Mogi
TOKYO, Aug 28 (Reuters) - The dollar slipped from a six-month
high against the euro on Thursday after comments by European
Central Bank officials the previous day scaled back speculation
about an ECB rate cut.
ECB Executive Board member Axel Weber, widely considered one
of the most influential ECB policy-makers, told Bloomberg News
that any talk about lower interest rates in the euro zone was
premature.
ECB Vice-President Lucas Papademos said further rate hikes
could be needed if stubbornly high inflation sparked a wage-price
spiral in the euro zone. []
"Weber's comments were hawkish and the market now appears to
be looking for reasons to push the euro higher, with an eye on
upcoming euro zone data," said Hiroshi Yoshida, a trader at
Shinkin Central Bank.
German unemployment data is due later in the day and euro
zone consumer price data is due on Friday.
A rise in crude oil prices also pushed the greenback lower.
Oil climbed above $119 <CLc1> on Thursday, after falling below
$112 last week.
The euro rose 0.5 percent to $1.4800 <EUR=>, recovering from
a six-month low at $1.4570 hit on Tuesday. The dollar eased 0.5
percent to 108.99 yen <JPY=>.
Stronger-than-expected Australian capital spending data
spurred a rebound by the Australian dollar against the dollar and
yen, pulling other cross/yen pairs higher, dealers said.
The Aussie jumped 0.7 percent to 94.67 yen <AUDJPY=R> while
the euro was up 0.1 percent at 161.35 yen <EURJPY=R>.
The dollar index, a gauge of the dollar's value against six
major currencies, also retreated from this year's high of 77.619
hit on Tuesday. The index fell 0.5 percent to 76.647 <.DXY>.
Despite U.S. economic weakness, the dollar had been
benefiting from growing signs since late July that the malaise
has spread beyond the United States.
Britain and Australia are expected to lower rates at some
point to help shield their economies from the threat of
recession, while the Federal Reserve is widely seen holding rates
steady for months.
This week's weak euro zone data had fuelled expectations the
ECB's next move would be to cut rates, but with such views fading
now the dollar's advantage may also weaken, traders said.
Financial markets have been swayed by speculation over the
future of Fannie Mae and Freddie Mac as doubts remain about their
ability to raise enough capital to sustain themselves in a
troubled U.S. housing market.
"The dollar remains vulnerable to speculation related to
these mortgage firms, with possible dollar selling if no
effective measure is struck," a dealer at a Japanese bank said.
Market players barely reacted to a Japanese newspaper report
on Thursday that said the United States, Europe and Japan had
planned to intervene and rescue a weak dollar in March.
[]
Japan's top financial diplomat, Naoyuki Shinohara, said on
Thursday he had no comment on the report and said there was no
change in Japan's foreign exchange policy. []
Traders in Tokyo said the news had little impact because
conditions have changed and the dollar has rebounded
significantly since then. But the report may stir intervention
expectations in the future if exchange rates reach extreme
levels, they said.
(Additional reporting by Shinichi Saoshiro; Editing by Edwina
Gibbs)
