* Dollar, yen gain as investors seek 'safer' assets
* Dlr at 90.00 yen <JPY=>, euro down at 115.70 yen <EURJPY=>
* Markets unimpressed by U.S. package agreement, bank plan
* Relative high-yielding currencies fall the most
(Adds quotes, updates prices)
By Jamie McGeever and Kylie MacLennan
LONDON, Feb 12 (Reuters) - The dollar and yen strengthened
on Thursday, boosted by their perceived safety in the eyes of
investors worried about the potency of government policies to
combat recession and bank-led weakness in global stock markets.
This nervous climate across financial markets also fueled
strong demand for government debt, while the biggest losers
among major currencies were the Australian and New Zealand
dollars, and sterling.
A record fall in euro zone industrial production
strengthened the likelihood the European Central Bank will cut
interest rates next month, something a string of ECB officials
have given heavy hints to over the past week.
Meanwhile, the Bank of England's quarterly inflation report
on Wednesday -- where it said it is ready to take unconventional
policy easing steps and indicated it may be comfortable with a
weaker exchange rate -- kept sterling under selling pressure.
"The fact we're in the middle of an economic downturn
continues to drive periodic phases of risk aversion, sometimes
short-lived," said Robert Minikin, head of FX strategy at
Standard Chartered.
"We have seen a drop in dollar/yen over the past 48 hours
... but we're really only back to the average mean of the
(recent) trading range," he said.
Disappointment after the U.S. bank rescue plan on Tuesday
fell short on detail continued to pervade market sentiment.
Investors remained wary despite U.S. Congress reaching a
compromise deal on the economic stimulus package.
At 1230 GMT the dollar was down 0.4 percent at 90.05 yen
<JPY=> and the euro was down 0.85 percent against the Japanese
currency at 115.70 yen <EURJPY=>.
The dollar index was up 0.3 percent at 86.10 <.DXY>.
The euro was down 0.3 percent against the greenback at
$1.2855 <EUR=> but was up 0.8 percent against the struggling UK
pound at 90.35 pence <EURGBP=>.
Knocked by the BoE's statement that it may take steps such
as buying gilts to boost the money supply, the pound was down 1
percent at $1.4230 <GBP=>.
The Australian dollar <AUD=D4> was down 1 percent at
$0.6492, also hit by parliament rejected the government's A$42
billion ($28 billion) economic stimulus plan.
U.S. SCEPTICISM
Japanese stocks fell 3 percent <>, major European
bourses were down 1 percent <> or more and U.S. futures
pointed to the three major U.S. indices opening down as much as
0.8 percent.
On the data front, a record fall in euro zone industrial
production in December [] weighed broadly on the
euro and strengthened the view that the European Central Bank
will cut rates again soon.
Several ECB officials on Wednesday confirmed market
expectations the central bank will cut interest rates next
month, something which ECB President Jean-Claude Trichet
indicated after keeping rates on hold at 2 percent last week.
Trichet speak again later on Thursday.
Markets could get a fresh steer on the U.S. economy later on
Thursday from January retail sales figures at 1230 GMT. Total
sales are forecast to fall 0.8 percent after tumbling 2.7
percent in December, while sales excluding autos are seen 0.5
percent down after a record 3.1 percent plunge in December.
"There is disappointment on the news coming out of the
States on both the stimulus plan and the bank bailout, and the
optimism that greeted a rise in the Baltic dry index last week
... has faded pretty quickly as people realise that economic
growth isn't going to turn on a sixpence," said Paul Robson,
currency strategist at RBS in London.
U.S. congressional negotiators reached a deal on Wednesday
on $789 billion in emergency spending and tax cuts aimed at
pulling the economy out of a deepening recession, and voting on
it could take place as early as on Thursday. []
Currency investors will also be alert to headlines that may
start to hit the wires ahead of the meeting in Rome Friday of
Group of Seven finance chiefs. For more on the G7, see
[].
