* Dollar gains as investors seek "safer" assets
* Markets unimpressed by U.S. package agreement, bank plan
(Updates prices, adds quotes, changes byline)
By Nick Olivari
NEW YORK, Feb 12 (Reuters) - The dollar climbed on
Thursday, attracting safe-haven bids on concerns about weakness
in stock markets around the world and the effectiveness of U.S.
government policies in combating recession.
Lower risk appetite also fueled strong demand for
government debt, another safe-haven destination. Data showing a
surprise rebound in U.S. retail sales and lower jobless claims
did little to ease the anxiety, which added to losses on the
high yielding currencies such as the Australian and New Zealand
dollars.
"The contrast between high- and low-yielders is
re-established in favor of lower yielders as markets lose faith
in the U.S. stimulus package being passed before Friday, while
still no fresh details emerging from the financial rescue
plan," said Ashraf Laidi, chief market strategist at CMC
Markets in London in a note to clients.
In mid-afternoon trading, the euro traded at $1.2807, down
0.7 percent after an earlier plunge to $1.2723 <EUR=>, its
lowest since Feb. 2.
The dollar rose 0.1 percent to 90.51 yen <JPY=>, while the
euro <EURJPY=> lost 0.6 percent to 115.99.
The dollar and yen tend to benefit when investors are
nervous about the state of the global economy and are inclined
to sell riskier assets such as stocks and commodities funded by
the two currencies.
But the volatile environment left investor sentiment
focused on the latest piece of economic or government news,
causing sharp fluctuations in price.
DISENCHANTED INVESTORS
Overall, investors remained disenchanted with the U.S.
government's efforts to stimulate the economy, its measures
seen as falling short of the market's very high expectations.
"Many investors perceive the banking bailout package and
the stimulus spending bill (as) poorly designed and too
little," said Andrew Wilkinson, senior market analyst, at
Interactive Brokers in Greenwich, Connecticut.
"This risk aversion theme is not entirely the path we had
expected the dollar to take, yet the potential for global
fallout means that the prospects for the dollar are more,
rather than less, positive."
Market anxiety lingered even though 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. For details, see []
The Dow Jones industrials <> fell 2 percent, as losses
on Wall Street mirrored declines in bourses worldwide on
concerns about the ability of Washington to rescue banks and
spark an economic recovery.
The Bank of England's quarterly inflation report on
Wednesday, when it said it is ready to take unconventional
policy easing steps, continued to keep sterling under pressure.
The pound was down 0.8 percent at $1.4263 <GBP=>.
In other currencies, the Australian dollar fell 1.1 percent
to US$0.6484 <AUD=>, while the New Zealand dollar was down 1.1
percent at US$0.5193 <NZD=>.
The Australian dollar was hurt after the Australian Senate
just blocked passage of the Labor government's A$42 bln
stimulus bill. This is only likely to delay passage not kill it
entirely but stimulus payments to households will slip from
March toward May, perhaps adding to case for another sizable
rate cut in March.
"This disappointment offset a positive surprise from the
January employment report which showed the economy added 1,200
jobs during the month," said Vassili Serebriakov, currency
strategist, Wells Fargo Bank in a research note.
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by
Tom Hals)
