* Euro rises vs dollar as stocks relatively
steady
* U.S. data shows record consumer price slide in Oct
* Sterling <GBP=> rises, shakes off BoE minutes
* Anxiety abounds about future of US automakers
* For up-to-the-minute market news, click on <FXNEWS>
(Updates prices, adds comment, U.S. data, changes byline,
dateline)
By Steven C. Johnson
NEW YORK, Nov 19 (Reuters) - The dollar fell against the
euro and sterling on Wednesday as U.S. stocks stabilized and
big buy orders for the European currencies pushed them through
key technical levels.
A U.S. economic report showing a record slide in consumer
prices last month also added to pressure on the dollar as it
suggested the Federal Reserve may have to cut benchmark
interest rates from an already low 1 percent.
Analysts, however, said investors remained skittish about
the health of the world economy and were likely to take future
cues from Wall Street's next move higher or lower.
"We saw euro and the sterling break through key trend lines
and momentum traders jumped in and followed the moves to push
them higher," said Brian Dolan, head of research at Forex.com
in Bedminster, New Jersey.
"But I think this is a false break because we're likely to
see stocks relapse into negative territory, as there's no
reason for them to rally in this environment."
Mid-morning, the euro was up 1.3 percent at $1.2780 <EUR=>
after earlier hitting a session peak of $1.2801. It rose 0.9
percent to 123.79 yen <EURJPY=>.
Sterling added 1.5 percent to $1.5200 <GBP=> after breaking
above the the $1.51 area, which Dolan said was a key trend line
in a steady decline that began when it traded around $1.66.
Traders shrugged off minutes from this month's Bank of
England policy meeting that showed policymakers unanimously
agreed to cut interest rates by 150 basis points and even
discussed a bigger cut. For details, see [].
Analysts said investors were still wary of taking on too
much risk, as evidenced by the dollar's 0.2 percent slide to
96.80 yen <JPY=>.
The yen rises along with risk aversion because investors
unwind trades in higher-yielding assets and currencies that had
been financed with cheaply borrowed yen.
Also of particular concern was the fate of the struggling
U.S. auto industry, which some investors fear may fail to win
emergency government loans.
Michael Woolfolk, senior currency strategist at The Bank of
New York-Mellon, said bankruptcy for General Motors, Ford or
Chrysler "could prove to be the next Lehman Brothers because of
the systematic risk their failure would create."
Markets tumbled in September when U.S. investment bank
Lehman Brothers failed.
"Equities moved dramatically lower in October and the
dollar and yen rallied, and most people still fear moves in
that direction will reassert themselves," said David Watt,
currency strategist at RBC Capital Markets in Toronto.
Economic data on Wednesday showed U.S. consumer prices
plunged 1 percent in October, while core prices that remove
food and energy costs fell 0.1 percent.
Kathy Lien, head of currency research at GFT Forex in New
York, said "less price pressure will give the Federal Reserve
more room to cut interest rates," adding she expects the
federal funds rate to drop to 0.5 percent from its current 1
percent next month.
(Additional reporting by Vivianne Rodrigues in New York and
Naomi Tajitsu in London; editing by Tom Hals)
