* Dollar steadies, market remains sceptical despite new steps
* Traders not taking bets, keeping market in narrow ranges
* Yen outperforms on persisting economic, credit worries
By Chikako Mogi
TOKYO, Nov 26 (Reuters) - The dollar rose against the euro on
Wednesday as market players remained sceptical that the latest
U.S. measures to boost consumer lending would ease concerns about
the financial crisis.
Market players were doubtful that successive U.S. steps aimed
at restoring confidence in the financial system and shoring up
the deteriorating economy would be sufficient, traders said.
Worries over the global economic downturn and credit jitters
have kept investors wary of taking risks, limiting selling of the
dollar and yen, traders said.
While the yen has been outperforming overall on growing
investor confidence in its safe haven status, sentiment towards
the dollar may be turning bearish, some traders said.
"There have been so many steps taken by the U.S. authorities,
leaving the impression they are doing anything they can do, but
not necessarily with consistency," said Mitsuru Sahara, a senior
manager at Bank of Tokyo-Mitsubishi UFJ.
"The market reaction has become increasingly cool, as it has
become accustomed to new measures coming one after the other
without feeling that the market has hit a bottom," he said.
The U.S. Treasury and Federal Reserve announced on Tuesday
further measures worth about $800 billion to support the debt and
mortgage-backed securities issued by mortgage giants Fannie Mae
<FNM.P> and Freddie Mac <FRE.P>, as well as measures to support
asset-backed consumer lending. []
The euro eased 0.8 percent to $1.2955 <EUR=>, after hitting a
three-week high of $1.3081 hit on Tuesday on trading platform EBS
as the new rescue steps eased credit concerns and eroded the
dollar's appeal as a safe haven, traders said.
The dollar edged down 0.1 percent against the yen to 95.14
yen <JPY=>, while the Nikkei average <> lost 1.3 percent.
The euro fell 0.9 percent against the Japanese currency to
123.30 yen <EURJPY=R> as the Nikkei slipped. []
The dollar index <.DXY>, which measures the value of the
greenback against a basket of currencies, was up 0.5 percent.
The dollar has been supported by repatriation flows and risk
aversion despite the slumping U.S. economy and financial crisis,
thanks to its status as the world's most liquid currency and key
global settlement currency.
But some traders said safe-haven demand for the dollar was
weakening.
"In the short term, the economic measures should be taken
positively. But the scale of U.S. fiscal spending has been
expanding, which could be negative for the dollar in the long
term," said Akira Takeuchi, treasury deparment manager at Chuo
Mitsui Trust and Banking.
"There may be a change in the trend of dollar-buying on
risk-aversion and the market may return to focus on U.S. economic
data," he said.
In contrast, the yen's safe-haven role is sustained because
of relatively light damage to the Japanese financial system and
economy compared to that of the United States, analysts said.
The yen has gained as Japanese investors sold overseas assets
while others have unwound carry trades in which investments in
high-yielding assests were financed by the low-yielding yen.
A report on Tuesday showed the U.S. economy shrank at a
faster rate in the third quarter than was originally estimated,
while a fall in U.S. house prices accelerated, suggesting the Fed
may need to cut interest rates further. []
The Dow and S&P 500 gained on Tuesday on optimism that the
new measures could revive the housing market and free up consumer
lending, but the Nasdaq fell as technology stocks slid on worries
about falling demand. []
Sahara at Bank of Tokyo-Mitsubishi UFJ said trading volume
remained light, and as the market was not near any key levels
traders were reluctant to push prices sharply in either
direction, keeping them in narrow ranges.
(Additional reporting by Kaori Kaneko)
