* Dollar steady vs yen, off Friday's 6-week low near Y91.60
* Bleak jobs data hurts dollar but U.S. stock rally supports
* Focus on fate of Big Three U.S. carmakers
By Masayuki Kitano
TOKYO, Dec 8 (Reuters) - The dollar was steady against the
yen on Monday, staying above six-week lows hit late last week,
with traders focusing on whether U.S. lawmakers would agree on a
rescue plan for the "Big Three" U.S. automakers.
White House and congressional negotiators sought on Sunday to
settle remaining differences over an emergency rescue for the
struggling auto industry. []
"It is difficult to tell what will happen so it is hard to
move," said Masafumi Yamamoto, head of FX strategy Japan for
Royal Bank of Scotland.
The dollar was nearly flat at 92.88 yen from late U.S.
trading on Friday <JPY=>.
On Friday, the dollar slipped to 91.58 yen on trading
platform EBS after data showed that U.S. payrolls fell by more
than half a million in November, logging the biggest monthly drop
in 34 years. []
But the dollar and higher-yielding currencies later rose
against the yen as U.S. shares rallied, with investors betting
that Friday's drop in oil prices to their lowest in nearly four
years would support U.S. consumer spending. []
Stock rises are seen as a sign of a recovery in investors'
risk appetite and can curb demand for the yen, which tends to
grow when risk-taking declines and carry trades are unwound.
The dollar fell to a 13-year low of 90.87 yen on EBS in late
October, as the yen rallied due to the unwinding of carry trades,
which involve selling low-yielding currencies like the yen to
invest in higher-yielding currencies and assets.
The euro rose 0.7 percent against the yen to 118.86 yen
<EURJPY=R>, according to Reuters data, as investors covered their
short positions after it fell as low as 117.90 yen earlier.
The euro fell to 115.87 yen on trading platform EBS on
Friday, a near six-week trough.
Against the dollar, the euro rose 0.6 percent to $1.2793
<EUR=>.
Rallies in Asian shares lent support for the European single
currency as investors' risk aversion eased, with the Nikkei share
average <> rising more than 5 percent.
With the U.S. jobs data out and U.S. lawmakers trying to
finalise a bailout for automakers, the risks of sharp declines in
the dollar may recede in the near term, said Takahide Nagasaki,
chief foreign exchange strategist for Daiwa Securities SMBC.
But the dollar could come under pressure again if the
market's focus shifts back to U.S. economic fundamentals,
Nagasaki said. "There is no question that the numbers were very
bad," he said about Friday's employment data.
Some traders said the uncertainty over the fate of U.S.
automakers was unlikely to disappear immediately, and that the
dollar may even fall below 90 yen before the end of the month.
Negotiators tried to forge an agreement in principle to
provide the Big Three with at least $15 billion in short-term
loans. The amounts under discussion are less than half the $34
billion that the automakers asked Congress for last week, and
some economists believe they may need $75 billion to $125 billion
to survive in the longer term.
"In the meantime, worries about the U.S. automakers have
calmed down to some extent on expectations of some kind of aid
from the government," said a trader at a Japanese bank. "But the
government is putting off how it really handles the problem until
the next administration. So uncertainty about the fate of the
industry may arise again."
A drop in the dollar to below 90 yen would likely lead to
heightened jitters about the potential for yen-selling
intervention by Japanese authorities, whose last currency
intervention came in March 2004.
Yamamoto at the Royal Bank of Scotland said the dollar and
high-yielding currencies seem likely to edge gradually lower
against the yen, with Japanese exporters likely waiting for
opportunities to sell dollars and other currencies for yen.
(Additional reporting by Kaori Kaneko; Editing by Chris
Gallagher)
