* Slight rebound in risk aids euro, Aussie vs dollar
* Market wary on China lending, Greece fiscal health
* Caution ahead of ECB meeting Thurs, U.S. jobs data
(Updates prices; changes byline, dateline; previous TOKYO)
By Neal Armstrong
LONDON, Feb 3 (Reuters) - A slight rebound in risk appetite
allowed the euro and higher-yielders like the Australian dollar
to recoup earlier losses versus the U.S. dollar on Wednesday in
cautious trade before the EU's verdict on Greece's fiscal plan.
A strong finish in Shanghai stocks <>, moving to the
highest close in a week, helped to stabilise sentiment.
Earlier, reports that two Chinese banks had called back some
loans reminded the market of jitters over tightening measures in
China and prompted some risk reduction [].
"We are seeing a cautious return of risk appetite as it
feels like some of the recent moves have been overdone. The
market is focusing on constructive data from the U.S. and the
euro zone and looking to pick up currencies such as the Aussie
and euro as a result," said Ray Farris, currency strategist at
Credit Suisse.
Ranges in currencies were fairly tight, with investors
cautious ahead of the European Commission's assessment due
before 1100 GMT.
At 0920 GMT, the euro <EUR=> had pared earlier losses made
on the Chinese banking story to trade up 0.4 percent at $1.4022,
aided by a slight tightening in Greek bond spreads over German
benchmarks.
Greece's fiscal problems have fuelled selling in the euro
this year, with concerns that other highly-indebted countries in
the bloc may also face problems.
The Commission will endorse a plan later on Wednesday by
Greece to cut its budget deficit and markets will be watching
carefully for signs it can be achieved. []
"The European Commission's verdict has been pretty well
telegraphed. It looks like they will accept the plan while
emphasising the Greek government will need to be more aggressive
with spending cuts and the like," said Credit Suisse's Farris.
The Australian dollar, which fell on Tuesday after the
central bank unexpectedly opted not to raise interest rates,
also pared losses from the Asian session to trade up 0.6 percent
around $0.8915, rebounding in spite of a widening in the
Australian trade deficit. []
The dollar index <.DXY> <=USD> was down 0.3 percent at
78.694 but not far from a six-month high of 79.534 struck
earlier this week.
The dollar has rallied in the past two weeks as investors
cut positions in currencies linked to growth in China, such as
the Aussie, on worries over the impact of credit tightening
measures.
Anecdotal evidence of the U.S. labour market will be
published later on Wednesday when the Challenger jobs cuts and
the ADP private-sector employment report for January will be
released ahead of Friday's monthly payrolls report. <ECONUS>
Investors were also cautious ahead of a European Central
Bank meeting on Thursday. Since there is little expectation for
a change in the ECB's monetary policy, the market's focus will
be on what ECB President Jean-Claude Trichet says about Greece.
"The market still lacks clear direction as there are
uncertainties about the U.S. banking regulation plan, Greece's
fiscal problems and potential China tightening," said Tomohiro
Nishida, treasury department manager at Chuo Mitsui Trust and
Banking in Tokyo.
The euro was steady on the day versus the yen <EURJPY=R> at
126.18 yen, paring earlier losses, while the dollar was down 0.3
percent versus the yen <JPY=> at 90.10.
Investors also awaited a Norwegian central bank interest
rate decision at 1300 GMT. No change is expected. The euro was
steady against the Norwegian crown at 8.1461 crowns <EURNOK=R>
(Additional reporting by Kaori Kaneko in Tokyo; Editing by
Nigel Stephenson)
