* Yen retreats as buoyant shares improve risk appetite
* Asia shares rally on China economic stimulus
* Market watching G20 summit meeting at the weekend
By Shinichi Saoshiro
TOKYO, Nov 10 (Reuters) - The yen fell against the dollar and
the euro on Monday as a rally in Asian shares improved investors'
appetite for risk, reducing demand for the Japanese currency.
Asian shares were boosted by China's launch of a huge
economic stimulus plan on Sunday, following a rebound on Wall
Street on Friday.
China announced an economic stimulus package worth nearly
$600 billion in what could mark the start of a round of big
spending or interest rate cuts by leading economies to stave off
recession.[]
The Nikkei average jumped 6 percent <> at one point after
China's move boosted investor confidence.
"The market panic over the yen's appreciation seems to have
passed. Stock rallies helped ease market participants' anxiety,"
said Mitsuru Sahara, senior manager at Bank of Tokyo-Mitsubishi
UFJ.
Share prices are regarded as a barometer of investors' risk
appetite, and their rise can halt the unwinding of risky carry
trades.
Carry trades involve the sale of low-yielding currencies like
the yen to invest in higher-yielding currencies and assets.
The dollar rose to 98.95 yen, up 0.7 percent from late U.S.
trading on Friday <JPY=>.
The euro gained 1.9 percent to 127.30 yen on trading platform
EBS <EURJPY=EBS>. Against the dollar, the euro rose 1.2 percent
to $1.2865 <EUR=>.
Yet investors remained unwilling to take risks as they are
worried about the depth of the economic slowdown, Saraha at Bank
of Tokyo-Mitsubishi UFJ said.
He said that the market swings between the optimistic view
that rate cuts and stimulus packages will bring stability to the
market, and the pessimistic view that the economy will
deteriorate further in spite of those measures.
"Players will be keeping an eye on moves by U.S. authorities
and remarks by officials as well as corporate news, especially
regarding financial companies and the automobile industry there,"
Sahara said.
On Friday, the U.S. Labor Department reported that U.S.
jobless rate hit a 14-year high just as General Motors <GM.N> and
Ford Motor Co. <F.N> said they were fast burning through cash for
operations.
Following the unveiling of China's large stimulus package,
market players are looking out for steps that could impact
currencies such as the policy steps to be announced by U.S.
President-elect Barack Obama and the Group of 20 leaders' summit
in Washington on Saturday.
Financial officials from the G20, which includes developing
powers such as China and Brazil as well as industrialised
nations, agreed on ways to stimulate growth at a meeting in Sao
Paulo, Brazil, at the weekend. []
They will hold further discussions on the matter on Saturday
in Washington.
Analysts say the yen could bounce back against the dollar and
euro unless the equities are able to find fresh factors to
sustain them.
"The G20 meeting is still days away and the stock markets
will need follow-through incentives to maintain their momentum,"
said Masafumi Yamamoto, head of forex strategy in Japan at Royal
Bank of Scotland.
"The yen stands to rebound if equities cannot keep their
gains," Yamamoto said.
Traders said Japanese exporter demand was also likely to
support the yen against the dollar at key levels such as 100 yen.
The Australian dollar rose 1.8 percent to $0.6861 <AUD=D4>.
With the rise in Asian shares improving risk appetite, the
Aussie brushed off the Reserve Bank of Australia lowering its
economic growth forecasts for the next two years. []
The RBA has slashed its key cash rate by 200 basis points
since September, taking it to a three-year low of 5.25 percent.
(Additional reporting by Kaori Kaneko; Editing by Sophie
Hardach)
