* Dollar index lower, dlr/yen back below 84 yen
* Euro rises, boosted by rally in the euro/Swiss franc cross
* China data, Dubai World deal supports commodity currencies
(Adds detail, updates prices)
By Anirban Nag
LONDON, Sept 10 (Reuters) - The dollar gave up most early
gains against the yen on Friday, heading towards 15-year lows
and keeping prospects for yen intervention alive, while the
Swiss franc stumbled as investors sold safe-haven currencies.
News that Dubai World [] had reached a deal to
restructure liabilities helped ease recently renewed fears about
Dubai's debt woes and boosted risk demand. That pushed the euro
up 1 percent on the day versus the Swiss franc, while a rise in
Chinese imports boosted commodity currencies including the
Australian dollar.
The dollar fell 0.2 percent against a basket of currencies
<.DXY> <=USD>, having failed to hold above the index's 55-day
moving average at 82.80. Against the yen, the dollar was off its
session highs of 84.28 yen <JPY=>, falling to 83.90 yen, as
Japanese Prime Minister Naoto Kan reiterated that Japanese
authorities would take decisive steps on the yen if needed.
Joint intervention in currency markets, however, would be
difficult, he said. []
The dollar rose earlier in the session, helped by an
increase in U.S. Treasury yields on Thursday on U.S. jobs data.
"There has been a moderate improvement in risk appetite
which is seeing the dollar fall," said Daragh Maher, deputy head
of global foreign exchange research at Credit Agricole CIB. "But
it is still very quiet there and it's unlikely to lead to any
trend."
Currency markets shrugged off worries about European banks
and news of a possible 9 billion euro capital raising by
Deutsche Bank <DBKGn.DE> [], which pressured global
stock markets ahead of a meeting to finalise European capital
rules at the weekend.
The euro was up 0.25 percent at $1.2727 <EUR=>, helped
mostly by its gains against the Swiss franc.
It hit the day's high of 1.3050 Swiss francs <EURCHF=> as
the Swiss currency came under broad selling pressure due to the
rise in risk appetite.
Traders cited Swiss banks selling the safe-haven franc
against the euro, dollar and other currencies. The dollar rose
nearly 1 percent on the day to 1.0249 francs <CHF=>.
But strategists remained sceptical about the euro's gains,
given the euro zone periphery's debt worries and renewed concern
this week about the region's banking sector.
"It is a risk-on environment which is helping the euro, but
clearly structural problems remain given widening spreads and
well known problems about its banking sector," said Simon
Derrick, head of currency research at Bank of New York Mellon.
His bank's data showed demand was not recovering for assets
in peripheral euro zone markets like Greece, Italy and Portugal.
The Swedish crown rallied to a three-year high of 9.2025
crowns per euro <EURSEK=D4> after a strong reading of Swedish
industrial production data on Friday added to the market's view
the economy is recovering faster than other countries.
LEADERSHIP RACE TO SWAY YEN
The shift away from safe-haven currencies also kept the yen
under pressure against the higher-yielding currencies and the
euro <EURJPY=R>. But the yen managed to pare some of its losses
against the dollar as Japanese authorities kept up their
rhetoric about intervention in the currency market.
The dollar hit a 15-year low of 83.34 yen this week,
intensifying speculation that Japan might step in to curb yen
gains if the move accelerated towards 80 yen.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
PDF presentation on the yen: http://r.reuters.com/mam52p
TAKE-A-LOOK on Japan politics []
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Attention was turning to a ruling party leadership race on
Sept. 14 in which Kan faces a challenge from powerbroker Ichiro
Ozawa.
Surveys give Kan a slight lead, but a Reuters poll showed a
win by Ozawa in the vote, which would also decide who is prime
minister, would likely give a short-term boost to stocks but
weaken Japanese government bonds and the yen. []
Ozawa has said Japan should intervene to weaken the yen, and
while some analysts say intervention would be difficult without
support from Washington, others say Tokyo under Ozawa would be
more likely to take action if the yen strengthens.
(Additional reporting by Naomi Tajitsu; Editing by Susan
Fenton)
