* Dollar, yen lower, higher-yielders advance
* Many financial centers closed for Easter holiday
* Focus on stock reaction to U.S. bank earnings, GM
(Adds comments, updates prices, changes byline)
By Nick Olivari
NEW YORK, April 13 (Reuters) - The dollar and yen dropped
against the euro on Monday as improved appetite for risk eroded
the safe-haven appeal of the U.S. and Japanese currencies.
Risk sentiment has improved in recent sessions, buoyed by a
five-week rally in Wall Street stocks and growing hopes that
the financial sector and global economy may be past the worst.
Higher-yielding currencies including the Australian and New
Zealand dollars advanced, with investor optimism further
boosted by a report that China was considering more stimulus
steps to promote growth.
Light volume exacerbated price moves, with many financial
centers closed for the Easter holiday and markets waiting for
the U.S. corporate earnings season to get into full swing.
"The major theme today is China and the positive outlook
for a recovery with the Australian and New Zealand dollars
benefiting from the theme," said Andrew Busch, global FX
strategist at BMO Capital Markets in Chicago in a note to
clients. "The greenback and Japanese yen are losing value
against most major currencies with market appetite for risk
increasing with the recent string of positive equity moves."
In mid-afternoon trade in New York, the euro rose 1.4
percent to $1.3369 <EUR=> and traded up 1.3 percent at 133.83
yen <EURJPY=>.
The dollar was down 0.1 percent versus the yen at 100.11
yen <JPY=>. Last week, the U.S. currency touched 101.45 yen,
its highest level in six months, as stock gains worldwide
encouraged investors to move away from the perceived safety of
the yen.
Commodity currencies rallied, fueled by the prospect of a
recovery in the Chinese economy. China is planning a new
economic stimulus package targeted at boosting consumption, the
China Securities Journal reported, citing an official of the
State Information Center. For details, see []
The Aussie dollar was up 1.4 percent at US$0.7293 <AUD=>
and the New Zealand dollar rose 1.2 percent to US$0.5898
<NZD=>.
"There's some small evidence that the Chinese economy is
actually doing substantially better," said Boris Schlossberg,
director of currency research at GFT Forex in New York. The
commodity currencies "are the primary beneficiaries of all this
demand from China and that's why they are continuing to
outperform."
China's industrial output picked up to 8.3 percent in
March, from a record low of 3.8 percent in the first two months
of the year. []
BANK EARNINGS
Investors will keenly watch how U.S. stocks react to the
possibility of a bankruptcy filing by General Motors <GM.N> and
key bank earnings later in the week.
The U.S. Treasury Department is directing General Motors to
lay the groundwork for a bankruptcy filing by June 1, The New
York Times reported on Sunday. []
Several key U.S. banks including Goldman Sachs <GS.N>,
JPMorgan Chase <JPM.N> and Citigroup <C.N> are all scheduled to
report first-quarter results this week.
"Investor confidence is regaining despite stocks being down
today," said Matt Esteve, a foreign-exchange trader at Tempus
Consulting in Washington.
"This week is littered with important corporate earnings,
specifically from financial institutions," he added. If the
banks "do not meet expectations or don't meet these now
inflated expectations, that could be a risk event for the
market."
Last week, the dollar rose against the yen, after positive
earnings guidance from Wells Fargo <WFC.N>.
