* Yen, dollar up on U.S. bank concerns, falling stocks
* Yen hits multi-week highs vs euro, dollar
* BoA, Citi may need more capital -- WSJ report
* Swine flu fears continue to weigh on sentiment
(Updates prices, adds quotes)
By Tamawa Desai
LONDON, April 28 (Reuters) - The dollar gained marginally
while the yen strengthened against other major currencies on
Tuesday, as risk sentiment was hit by renewed concerns about the
U.S. banking sector and tumbling share prices.
The Japanese currency hit a seven-week high against the euro
and a one-month high against the dollar after the Wall Street
Journal reported regulators have told Citigroup <C.N> and Bank
of America <BAC.N> they may need to raise more capital based on
early results of government stress tests on banks
[].
European shares tumbled more than 2 percent <> by
midday trade, prompting investors to seek the perceived safety
of the dollar and yen.
Lingering concerns about the implications of an outbreak of
swine flu over the weekend also weighed on sentiment.
The World Health Organization lifted its pandemic alert to
phase 4 from phase 3, but also said it did not recommend any
travel restrictions or border closures.
"The flu story and the story on Citi and Bank of America
have spooked the whole market," CMC Markets analyst James Hughes
said. "We will have to wait until the results of the stress
tests on May 4 and it does raise fears because Citi and Bank of
America are not necessarily the worst hit," he added.
By 1050 GMT, the dollar fell 0.3 percent against the yen to
96.29 yen <JPY=>, after falling as low as 95.63 yen.
The euro lost 0.4 percent against the Japanese currency to
125.30 yen <EURJPY=R>, having earlier hit a seven-week low
around 124.38 yen on EBS trading systems.
The euro pared some losses after better-than-expected first
quarter earnings results by Deutsche Bank <DBKGn.DE> and Spanish
bank BBVA <BBVA.MC>, traders said.
The dollar index rose 0.1 percent to 85.771 <.DXY>. The euro
was flat at $1.3011 <EUR=>
YEN GAINS
The yen also gained as hedging by Japanese exporters surged
on Tuesday ahead of Japan's "Golden Week" holiday period from
Wednesday through May 7, analysts said.
Japanese market players were selling dollar/yen on risks of
further downside before the U.S. stress test results, traders
said.
"Our order book shows greater exporter activity today," Bank
of Tokyo-Mitsubishi UFJ said in a note.
The Mexican peso fell to near a one-month low against the
dollar <MXN=> after taking its biggest tumble the previous day
against the greenback in six months.
The peso <MXN=> was quoted around 14.092 per dollar,
according to Reuters data, having hit a session low of 14.135,
its weakest since the start of this month.
Later in the session, the latest S&P Case/Shiller U.S. home
price index is released at 1300 GMT and U.S. consumer confidence
data at 1400 GMT.
German preliminary inflation figures will also be eyed, with
regional data so far suggesting prices ticked up in April
[].
(Additional reporting by Jessica Mortimer; Editing by Ruth
Pitchford)
