* Dollar falls as risk aversion cools
* U.S. stocks jump after Citigroup plan
* Obama announces economic team
* For up-to-the-minute market news click on <FXNEWS>
(Adds comments, updates prices)
By Vivianne Rodrigues
NEW YORK, Nov 24 (Reuters) - The U.S. dollar fell against
the euro and a basket of currencies on Monday as risk aversion
eased after the U.S. government agreed to inject $20 billion of
new capital to rescue troubled Citigroup <C.N>.
Stock markets jumped across the globe in a sign of higher
risk appetite, which has been linked recently to dollar
weakness.
While investors remain cautious due to ongoing concerns
about a global recession, they welcomed the U.S. government's
$300 billion-plus lifeline to prevent the collapse of the
world's largest banking group. [].
"The forex market continues to be all about risk appetite
and its proxy, equities," said Dustin Reid, director of FX
strategy at RBS Global Banking & Markets in Chicago.
The rescue plan "clearly sends a signal that some of the
U.S. banks, in the government's view, are too big and important
to fail. The move should also help to calm overall market
sentiment for the very short term."
U.S. stocks trimmed gains as President-elect Barack Obama
named Timothy Geithner as U.S. Treasury secretary, as widely
expected, and that also caused the euro to trim gains against
the dollar. Obama did not provide any details about a proposed
new stimulus package. [].
"We're seeing the euro come off a little bit," said Steven
Butler, director of foreign exchange trading at Scotia Capital
in Toronto. "There are no real surprises to his economic team.
The names have all been leaked last week."
In midday trading in New York, the euro was still up more
than 2 percent on the day versus the dollar at $1.2849 <EUR=>.
It traded earlier as high as $1.2897, a two-week high.
The euro also rose 2.4 percent to 123.58 yen <EURJPY=>.
Sterling followed the rallying direction of UK share prices
and rose 1.4 percent to $1.5091 <GBP=>. British Finance
Minister Alistair Darling unveiled a broad stimulus plan to
jump-start the economy.
The dollar was also 1.5 percent lower at 86.121 against a
basket of currencies <.DXY>.
"A softer bias for the dollar is likely this week, though
we see the (Citi) announcement as a temporary reprieve for
markets rather than a permanent solution," said Nick
Bennenbroek, head of currency strategy at Wells Fargo Bank in
New York.
"At the margin, concerns about the cost of government
assistance might be weighing on the dollar," he added.
Demand for U.S. stocks rose, while the dollar has been
falling since late Friday after news leaked that Geithner,
currently New York Federal Reserve President, would be named as
Treasury secretary.
Obama appointed Geithner at a press conference in Chicago
in which he also named former Treasury chief Lawrence Summers
to head the National Economic Council. [].
"The new administration is beginning to grease the wheels
and the market is liking it," Kathy Lien, director of currency
research at GFT Forex said.
WEAK DATA IN US, EUROPE
On the data front, a report showed sales of U.S. existing
homes fell 3.1 percent in October to a 4.98 million-unit annual
rate. [].
"This still shows the housing market continuing to be weak
and is consistent with the Fed's recent assessment that the
U.S. housing market is not expected to finish contracting until
2010," said Sacha Tihanyi, associate currency strategist at
Scotia Capital in Toronto.
In Europe, a below-consensus reading for the German
business climate underlined weakness in the region's largest
economy, keeping expectations high for cuts in euro zone
interest rates. [].
The Munich-based Ifo economic research institute said its
business climate index declined to 85.8 in November from 90.2
in October, hitting its lowest since February 1993. The reading
was weaker than forecasts of a 88.7 reading.
"(The reading) was truly awful and suggests that the fall
in output in the euro zone's largest economy gained both
momentum and traction in the fourth quarter," said Tom Vosa,
head of market economics at nabCapital in London.
The sharp slowdown will put pressure on the ECB to cut
rates aggressively next month from the current 3.25 percent, he
added.
(Additional reporting by Nick Olivari and Gertrude
Chavez-Dreyfuss; Editing by James Dalgleish)
