FOREX-Dollar, yen firm on risk aversion; BoE cuts rates

                                
 * Dlr, yen benefit from risk aversion
                                
 * Stg bounces as BoE delivers 50 bps rate cut, as expected
                                
 * Euro slides, weak data keeps pressure on ECB
                                
 
                                
 (adds quotes, updates prices)
                                
 By Veronica Brown
                                
 LONDON, Jan 8 (Reuters) - The dollar and yen rose at the
expense of higher-yielding currencies on Thursday as falling
shares tempered risk demand, while the euro came under selling
pressure as dismal data highlighted concerns about a
deteriorating euro zone economy.
                                
 Sterling bounced to three-week highs versus the dollar and
the euro after the Bank of England met market expectations with
a 50 basis point interest rate cut to 1.5 percent, continuing
attempts to buffer the UK economy from a deep recession.
                                
 The dollar built momentum versus higher-yielding currencies
as worries about the global economy slapped oil prices down some
12 percent on Wednesday, pressuring commodity currencies like
the Australian and New Zealand dollars lower.
                                
 This helped the U.S. currency recover some losses suffered
in the previous session after a disastrous reading of U.S.
employment, but the dollar fell against the yen, which benefited
from risk aversion as share prices in Asian and Europe fell.
                                
 The dollar hit a session low versus the yen after
disappointing sales figures from Wal-Mart Stores Inc <WMT.N>,
the world's largest retailer, which also cut its quarterly
earnings outlook on Thursday [ID:nL8478360].
                                
 The Dow Jones industrial average <.DJI> had fallen 244.68
points, or 2.71 percent, to 8,770.42, while stock futures
pointed to a lower Wall Street open later on Thursday.
                                
 Figures on Wednesday showed a 693,000 decline in U.S.
private jobs in December, hitting home the view the U.S. economy
is deteriorating fast with global reverberation.
                                
 "The market is very nervous. You get a couple of good days
where people come out of the woodwork and then the Dow falls and
everyone is away again," said Lee Ferridge, currency strategist
at State Street Global Markets.
                                
 "Much will depend on the Dow today, if it comes back we'll
see the commodity currencies come back," he added.
                                
 By 1245 GMT, the dollar <.DXY> was little changed against a
currency basket at 82.073. Yen strength pushed the euro down 1.4
percent to 124.44 yen <EURJPY=>, while the dollar was down 1.3
percent at 91.38 yen <JPY=>. The Australian dollar was down 1
percent at $0.7033 <AUD=>.
                                
 The euro traded 0.1 percent lower at $1.3613, after falling
sliding to a session low of $1.353 according to Reuters data.
The pair hovered within range of a three-week low around $1.33
hit earlier in the week.
                                
  The euro was weighed after figures showing an unprecedented
10.6 percent month-on-month fall in German exports in November
as global demand for cars and other manufactured products have
plummeted due to a global recession [ID:nL88871].
                                
 A series of weak euro zone economic data further fuelled the
view that the recession is deepening, which may require faster
interest rate cuts by the European Central Bank. The euro zone's
business climate declined much more than expected to an all-time
low in December [ID:nL7619533].
                                

                                
 CABLE TURNS TO RUBBER
                                
 Sterling rose against the euro and dollar, while UK rate
futures fell after the Bank of England's 50 basis point cut
fuelled the view that rates may not be cut so aggressively going
forward.
                                
 The BoE said in a statement that "the substantial
depreciation in sterling over recent months may help to moderate
the impact on UK net exports of the slowdown in global growth."
But it added that a weaker pound will raise the cost of imports.
                                
 Sterling rose as high as $1.5290 <GBP=>, according to
Reuters data. The euro was down more than 1 percent, hitting a
low of 88.81 pence <EURGBP=D4>, its lowest since mid-December.
                                
 "I think it's pretty likely that it was sterling that
decided them to slow down the pace of cuts," said Brian
Hilliard, economist at Societe Generale.
                                
 "I still think there's more (rate cuts) in the pipeline.
Notable by its absence was any comment on quantitative easing. I
don't think it's actually on the agenda until they get rates
down to close to zero."
                                
 British front month interest rate futures fell to turn
negative after the decision. Front month contracts traded as
much as 4 ticks lower, having been between 6 and 8 ticks higher
before the announcement.
                                
 (Additional reporting by Naomi Tajitsu; Editing by Ruth
Pitchford and Andy Bruce)