* Yen trims gains as Nikkei bounces off lows
* Market eyes more ECB, BoE rate cuts
* Investors await U.S. jobs data
By Masayuki Kitano
TOKYO, Nov 7 (Reuters) - The yen pared gains against the
euro and sterling on Friday as Tokyo shares bounced off earlier
lows in a volatile session.
The yen had risen earlier as Tokyo shares fell by more than
7 percent at one point, but trimmed its gains when the Nikkei
recovered some ground to finish 3.6 percent lower <>.
Share prices are regarded as a barometer of investors' risk
appetite, and their decline can trigger an unwinding of carry
trades, which involve selling low-yielding currencies like the
yen to invest in higher-yielding currencies and assets.
Market players said worries about the global economy were
likely to continue to support the yen.
"The lingering concerns about the financial system and
worries about the economic outlook give investors no choice but
to reduce their risk tolerance. It is not yet an environment to
buy stocks," said Yousuke Hosokawa, senior manager at treasury
department, Chuo Mitsui Trust & Banking.
Market expectations for the ECB and the Bank of England to
lower interest rates further after their rate cuts on Thursday
gave the yen support, market players said.
The ECB cut rates by 50 basis points to 3.25 percent on
Thursday and signalled another cut is possible next month, while
the BoE slashed rates by 150 basis points to 3.0 percent, with
economists saying more rate cuts would follow. []
The euro dipped around 0.1 percent against the yen from late
U.S. trading on Thursday to 124.06 yen <EURJPY=R> after falling
to around 122.50 yen earlier.
Sterling shed its losses against the yen and rose 0.1
percent 152.71 yen <GBPJPY=R>, well off its intraday lows near
150.30 yen.
The dollar fell 0.3 percent to 97.44 yen <JPY=>.
"The yen tends to attract buying because of the weakness in
economies around the world," said Takahide Nagasaki, chief
foreign exchange strategist for Daiwa Securities SMBC.
Unless the global economy improves, it is hard to expect
investors to actively sell the low-yielding yen to invest
elsewhere, Nagasaki said.
Highlighting the global economy's woes, the International
Monetary Fund said on Thursday that the world's developed
economies were headed for the first full-year contraction since
World War II in 2009. []
INTEREST RATE OUTLOOK
The median forecast in a Reuters survey on Thursday showed
that economists expect the BoE to trim interest rates to 2.5
percent at a rate decision in December, while the ECB is seen
likely to lower rates to 2.75 percent by year-end.
By contrast, interest rates in Japan have limited room to
fall from the current 0.3 percent.
While rate cuts typically weaken a currency's appeal, market
players said aggressive monetary easing such as the Bank of
England's steep rate cut could also be viewed as a proactive
effort to boost growth and have a positive impact.
But it will probably take time for the effects of such
monetary easing to take hold, said the trader for the major
Japanese bank , adding that the euro and sterling could come
under selling pressure in the near term.
The euro and sterling reversed course after falling against
the dollar earlier, with the euro rising 0.3 percent to $1.2736
<EUR=> and sterling rising 0.5 percent to $1.5677 <GBP=> ahead
of the release of U.S. jobs data later on Friday.
The U.S. employment data is likely to show that job cuts hit
a five-year high of 200,000 in October, according to a Reuters
poll, and unemployment jumped to 6.3 percent in October from 6.1
percent. []
(Additional reporting by Kaori Kaneko; editing by Sophie
Hardach)
