* High-yielders up as risk aversion eases, but stocks down
* IMF official: Worst slump since WWII could last to 2010
* Dollar seen rebounding broadly in coming sessions
(Updates prices, adds comment)
By Gertrude Chavez-Dreyfuss
NEW YORK, March 6 (Reuters) - The dollar slid versus the
euro on Friday, as investors locked in gains and pared back
safe-haven trades on the greenback, emboldened by U.S. payrolls
data showing job losses were less severe than many had feared.
The euro/dollar pair usually tracks the performance of U.S.
equities, falling when stocks are getting hammered. But on
Friday, Wall Street shares were down for the most part and the
dollar still fell against the euro, although it came off its
lowest levels.
This suggested that, in the currency market at least, the
employment report that showed job declines of 651,000 last
month was not as dismal as the market's worst expectations.
Risk appetite in the currency market was moderately
evident, with the rise in higher-yielding units such as the
Australian and New Zealand dollars and some emerging market
currencies, such as the Brazilian real <BRL=>, Thai baht
<THB=>, and Mexican peso <MXN=> .
Richard Franulovich, senior currency strategist at Westpac
Banking Corp in New York, said since the jobs number was
largely in line with market forecasts, there was a semblance of
risk appetite in the market "and so the dollar has come off
against the euro."
"But I still believe that the dollar has not yet seen its
highs. I still have a healthy respect for this uptrend," he
added.
Friday's jobs report showed that on top of steep job losses
last month, the jobless rate surged to a 25-year high at 8.1
percent.
The euro rose above $1.27 to its highest level against the
dollar in a week and in the late afternoon session was at
$1.2638 <EUR=>, still up 0.6 percent on the day.
The dollar lately has tended to rise in response to
horrible economic data because investors see it as the safest
store of value at a time when economies across the globe are
contracting sharply.
AUSSIE, KIWI DOLLAR GAIN
Sterling also hit a one-week high above $1.43 <GBP=> before
retreating to $1.4081, down 0.4 percent.
The dollar rose 0.4 percent versus the yen to 98.31 yen
<JPY=>, erasing earlier losses as investors recovered some
taste for risk. The yen has struggled recently as Japanese
exports plummet and the economy weakens sharply.
The dollar fell 0.8 percent to 1.1597 Swiss francs <CHF=>.
The Australian dollar rose 0.6 percent to US$0.6408 <AUD=>, as
did the New Zealand dollar, which climbed 0.7 percent to
US$0.5022 <NZD=>.
Some investors said the dollar's rally to multi-month highs
against a number of major currencies this week, including the
euro and yen, was also driving Friday's sharp reversal.
"The dollar tested recent highs over the past few sessions,
so the moves we're seeing now are not surprising," said Todd
Elmer, senior currency strategist at CitiFX in New York.
In the week ahead, strategists expect the dollar to regain
its bid tone with more evidence of a deepening global
recession.
"Ongoing jitters about the state of the U.S. financial and
auto sector, speculation of further steps to support major U.S.
banks should keep the VIX (volatility) index elevated, which is
a positive for the U.S. dollar," said Brown Brothers Harriman
in a research note.
Analysts said the picture gets even gloomier for other
parts of the world, including the euro zone, which still faces
flagging growth and a worsening slump in Eastern Europe.
A top International Monetary official on Friday told a UK
newspaper that developed economies were in the worst slump
since World War Two and said it could last into next year.
[]
In that atmosphere, "dollar assets remain an attractive
option to risk averse investors, especially as other central
bank rates converge to zero and more unconventional policies
are implemented," said UBS currency strategist Brian Kim.
(Additional reporting by Steven C. Johnson; Editing by Chizu
Nomiyama)
