FOREX-Risk aversion aids dollar, yen; kiwi hits 6-yr low

                                
 * Risk aversion buoys dollar, yen ahead of U.S. GDP
                                
 * Dollar dips vs yen as Nikkei drops 3 pct
                                
 * NZ dollar hits six-year low vs U.S. dollar
                                
 By Rika Otsuka
                                
 TOKYO, Jan 30 (Reuters) - The dollar rose against the euro on
Friday as deepening concerns over the global recession prompted
investors to shed risky assets and seek the harbour of the
world's most liquid currency.
                                
 The yen climbed across the board as a drop in stock markets
sparked unwinding of carry trades, in which investors use
low-yielding currencies such as the yen to fund purchases of
assets and currencies with higher yields elsewhere.
                                
 The New Zealand dollar struck a six-year low against the U.S.
dollar after Reserve Bank of New Zealand Governor Alan Bollard
said there was room for more interest rate cuts. [ID:nWEL409589]
                                
 Worries over a prolonged global economic slump increased as
government data showed that Japan's industrial output plunged 9.6
percent in December, the biggest drop on record. [ID:nT99694]
                                
 The data came ahead of the U.S. government's first snapshot
of the economy in the fourth quarter, which is expected to show
it at its weakest in 26 years. [ID:nN28529010]
                                
 U.S. gross domestic product, due at 1330 GMT, is forecast to
show a 5.4 percent decline on an annualised basis, hit by
plunging consumer spending as unemployment swelled.
                                
 "If U.S. GDP comes out much weaker than expected, risk
aversion would increase and the yen would be the beneficiary,"
said Toru Umemoto, chief FX strategist, Japan, at Barclays
Capital.
                                
 "Bigger-than-expected negative U.S. growth will have a
negative impact on the global economic growth."
                                
 The euro fell 0.4 percent from late U.S. trade to $1.2906
<EUR=> after dropping more than 1 percent on Thursday.
                                
 It slid 1 percent to 115.35 yen <EURJPY=R>.
                                
 The euro took a hit on Thursday after billionaire investor
George Soros told an Austrian newspaper the currency may not
survive without a European Union plan to deal with toxic assets.
[ID:nN29299007]
                                
 A comment from European Central Bank President Jean-Claude
Trichet that the ECB could push interest rates below 2 percent
also kept the currency on the back foot.
                                
 "The euro is likely to stay under selling pressure as there
are expectations for a ECB rate cut this spring," said Osamu
Takashima, chief currency strategist at Bank of Tokyo-Mitsubishi
UFJ.
 The dollar fell 0.7 percent to 89.39 yen <JPY=> on a drop in
stocks, while month-end dollar demand from Japanese companies
limited losses.
                                
 Tokyo's Nikkei share average <.N225> ended down 3.1 percent,
posting a 9.8 percent drop on the month in its worst monthly
performance since October.
                                
 The New Zealand dollar <NZD=D4> hit a six-year low of
$0.5077, according to Reuters data.
                                
 The kiwi later recovered most of the day's loss to stand at
US$0.5115 but it sank 1 percent to 45.85 yen <NZDJPY=R>. It
struck an eight-year low of 45.03 yen last week.
                                
 The New Zealand central bank cut interest rates on Thursday
by an aggressive 150 basis points to a record low of 3.5 percent
to boost an economy deep in recession.
  (Additional reporting by Charlotte Cooper; Editing by Brent
Kininmont)