* Yen gains as investors reduce risk exposure; dlr edges up
* Bank of America deemed to need $34 bln more capital-source
* Markets wary before US stress tests, ECB and BoE meetings
* US ADP data awaited at 1215 GMT; key US jobs data due Fri
(Updates prices, adds quotes)
By Jessica Mortimer
LONDON, May 6 (Reuters) - The yen rose across the board on
Wednesday, while the dollar edged up against the euro as
investors braced for the results of U.S. stress tests on banks
and a number of other events that could dampen market sentiment.
Concerns about these results, which are due on Thursday,
were heightened after a source familiar with the tests said Bank
of America required as much as $34 billion in additional capital
[].
This prompted investors to pare back exposure to risk,
buying back into the perceived safety of the yen and the dollar
against the euro and currencies seen as higher risk such as the
Australian dollar.
Markets were also cautious ahead of Thursday's policy
decisions by the European Central Bank and the Bank of England
and key U.S. non-farm payrolls data on Friday.
[][]<ECONUS>.
U.S. ADP employment figures for April due at 1215 GMT could
also give a clue on just how badly the U.S. jobs market is
faring as the market looks ahead of Friday's closely watched
jobs numbers.
This nervousness called a halt to a recent rally in risk
assets, which propelled the Australian dollar to a seven-month
high against the dollar and the yen earlier this week as
optimism built that the global economy may be over the worst.
"Some of the news flow on the U.S. stress tests has caught
people on the hop a bit and people are suddenly worried about
the potential for a shock," RBS currency strategist Paul Robson
said.
"Risk appetite will probably return but I would be surprised
if people got bullish on risk ahead of all the events coming up
this week," he added.
At 1139 GMT, the euro fell 0.7 percent against the yen to
130.77 yen <EURJPY=R>, while the dollar lost 0.5 percent to
98.36 yen <JPY=>.
Against the dollar, the euro <EUR=> fell 0.2 percent on the
day to $1.3295, well below the one-month high of $1.3439 touched
on trading platform EBS on Tuesday, while the Australian dollar
fell 0.2 percent to $0.7400 <AUD=>
BETTER DATA
Data continued to suggest that the global economy is showing
tentative signs of recovery.
The euro zone purchasing managers' index for services was
unexpectedly revised up to post its biggest one-month rise since
December 2001, while the equivalent survey for the UK showed the
slowest contraction in the sector in eight months. See
[] and [].
The better euro zone data and a warning from China's central
bank that U.S. quantitative easing measures could cause the
dollar to weaken briefly pushed the euro into positive territory
against the dollar.
But it was soon pegged back, with investors remaining
nervous ahead of Thursday's policy announcement by the European
Central Bank (ECB), as well as one from the Bank of England
(BoE).
The ECB is expected to cut interest rates to a record low of
1 percent, while the BoE is seen holding rates at 0.5 percent,
also a record low, though the main focus will be on whether the
ECB announces any additional unconventional policy measures.
[] [].
Analysts noted, however, that beyond this week the mood is
likely to remain buoyant and a rally in riskier assets could
resume.
"Evidence of green shoots in the global economy is still
present, with improvements in leading economic indicators and in
key areas such as the U.S. housing market, and there are no
signs that things will turn the other way," Stockholm-based SEB
currency strategist Johan Javeus said.
(Reporting by Jessica Mortimer)
