*Dlr index inches up as investors remain jittery over economy
*Asian shares pare earlier losses, weigh on yen
*For up-to-the-minute market news click on <FXNEWS>
By Satomi Noguchi
TOKYO, Nov 11 (Reuters) - The dollar edged up against a
basket of currencies on Tuesday as investors remained jittery
over a global recession with a dismal outlook for U.S. companies
in a harsh economic environment.
The yen surrendered gains against the dollar and slipped
against the higher-yielding Australian dollar as Asian shares
pared earlier losses.
Asian stock markets initially fell on Tuesday, tracking Wall
Street shares lower as worries about the future of U.S. companies
like General Motors <GM.N> mounted. []
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The Nikkei stock average dropped over 4 percent in early
trading but later halved its losses, with the market receiving a
sense of relief from continued gains in so-called China stocks.
[]
The rebound in Asian shares slightly eased investor wariness
about risk and weighed on the yen, which has tended to benefit in
the recent environment of extreme risk aversion.
Market players say the focus is on how the financial crisis
is affecting corporations and the economy as a whole.
"The market is watching out for news on individual companies
to see how developments at firms will affect the overall market
and the economy," said Hideki Amikura, deputy general manager of
the forex section at Nomura Trust Bank.
"But major reactions in the market may be delayed until after
the outcome of the G20 meeting at the weekend," Amikura said.
Traders said gloomy U.S. company news including layoffs, a
bankruptcy filing by a major electronics retailer and a record
$29 billion quarterly loss by mortgage giant Fannie Mae <FNM.P>
dented investor sentiment and spurred worries that the economy
was in for a long and deep recession.
Finance officials from the G20 group of developed and biggest
emerging economies agreed on Sunday on the need to take measures
to stimulate growth and fight off the threat of a global
recession.
At the Washington summit this weekend, world leaders meet to
discuss precisely what steps they need to work out in coming
months, and how much more say emerging economies will have over
global finance. []
The dollar index, which measures the greenback's performance
against six major currencies, edged up 0.1 percent to 86.053
<.DXY>.
The euro slipped 0.2 percent to $1.2716 <EUR=> from late New
York trade on Monday after briefly dropping below $1.27 on
growing evidence from the euro zone backing views that the
economy there had probably already slipped into a recession.
Against the yen, the dollar was unchanged at 98.02 yen <JPY=>
after retreating to 97.49 yen.
"We are in a period in which foreign investors including
hedge funds prepare for the year-end and raise their cash
holdings," said Minoru Shioiri, chief manager of forex trading at
Mitsubishi UFJ Securities.
"The yen could rise further if there are more funds rushing
to liquidate positions, but the peak may have passed for now,"
Shioiri said.
The euro fell 0.3 percent against the Japanese currency to
124.70 yen <EURJPY=EBS>, after dropping as low as 123.80 yen
earlier as speculators pushed the yen higher when the Nikkei
momentarily dropped more than 4 percent.
The Australian dollar recovered from earlier losses against
the dollar and the yen to rise 0.4 percent to $0.6719 <AUD=D4>
and edge up 0.2 percent to 65.87 yen <AUDJPY=R>, respectively.
Earlier, the Aussie fell as data showing Australian business
conditions have taken a steep turn for the worse as confidence
slumped to record lows. []
(Additional reporting by Shinichi Saoshiro; Editing by Chris
Gallagher)
