* Risk aversion boosts US dollar
* US durable goods orders fall more than expected
* EU plans 200 bln euro stimulus package
* China cuts interest rates by 108 bps, yen pares gains
(Recasts, adds quotes, changes byline)
By Vivianne Rodrigues
NEW YORK, Nov 26 (Reuters) - Renewed risk aversion helped
support the U.S. dollar versus the euro on Wednesday amid fears
of a deepening economic recession in the U.S. after a report
showed a much larger than expected drop in durable goods
orders.
Dollar gains recently have been linked to repatriation of
funds and extreme risk aversion instead of economic
fundamentals, analysts said.
Demand for the euro also fell as investors were pessimistic
about whether a European stimulus package will be sufficient to
ease the financial crisis.
The dollar edged lower versus the yen and U.S. stocks
declined as the government said new orders of durable goods
suffered a steeper-than-expected 6.2 percent slide in October.
See, []
In another report, the Labor Department said the number of
U.S. workers filing new claims for jobless benefits fell by
14,000 last week, remaining at levels consistent with a
deteriorating labor market. See, []
"Overall, the U.S. numbers this morning all have a negative
tone to them and that should keep risk aversion higher," said
Shaun Osborne, chief currency strategist at TD Securities in
Toronto.
In mid-morning trading in New York the euro was 0.7 percent
lower at $1.2954 <EUR=>. The dollar fell 0.2 percent versus the
Japanese yen to trade at 95.03 <JPY=>.
"The durables is not a pleasant number. It's horrid across
the board. I think that's pressuring stocks and the dollar/yen
a little bit," said Boris Schlossberg, director of curency
research at GFT Forex in New York.
The euro also dropped against the yen after European
Commission chief Jose Manuel Barroso proposed an EU-wide fiscal
stimulus package worth 200 billion euros to revive economies
across the region [].
Analysts said that the plan marked a step in the right
direction, but uncertainty about its efficacy and general
concerns about a deep slowdown in the global economy were
keeping investors in the mood to sell risky assets.
"The sentiment is one of high risk aversion. The stimulus
packages are a first step and are welcome, but the fundamentals
across the world are still negative," Commerzbank currency
strategist Antje Prafcke said in Frankfurt.
The European plan follows the announcement on Tuesday of an
$800 billlion U.S. plan to rescue its debt securities markets.
The European currency was last 0.8 percent lower at 123.46
yen <EURJPY=>.
CHINA CUTS RATES
Analysts said that the U.S. currency was also on the back
foot against the yen as concerns remained about whether the
Federal Reserve's plan would be effective.
The yen has rallied in the past month as risk aversion has
triggered a massive unwind of carry trades, in which investors
used the low-yielding yen to fund purchases of assets in
higher-yielding currencies.
The Japanese currency pared some gains, however, after China
surprised markets with a 108 basis point rate cut, its largest
since 1997 [].
The yen is often used as a proxy for the Chinese yuan,
which trades in a tight band against the dollar.
(Additional reporting by Steven C. Johnson, Gertrude
Chavez-Dreyfuss in New York and Jessica Mortimer in London)
