* Dollar gains on yen, euro, sterling; oil slips below $46
* Many Asian markets closed for Lunar New Year
* Nikkei average treads water ahead of raft of earnings
By Charlotte Cooper
TOKYO, Jan 26 (Reuters) - The dollar rose against the yen
and euro on Monday as investors looked to U.S. authorities for
steps to help the financial sector and the economy, while oil
prices slipped on fears about a deepening global downturn.
Japanese stocks trod water ahead of corporate earnings, but
many Asian markets were closed for the Lunar New Year, with
Australia and India also shut for national holidays, making
activity thin.
U.S. President Barack Obama's top economic adviser did not
rule out that more money may be needed to stabilise the U.S.
financial system, as Obama sought at the weekend to build
public support for an $825 billion economic recovery plan.
The Federal Open Markets Committee (FOMC) meets on Tuesday
and Wednesday, with the market awaiting signs of how the Fed
will help the broader U.S. economy now its main monetary tool,
the fed funds rate, is set to remain in a range of zero to 0.25
percent.
"What investors are concerned about most is the health of
the UK and European banking sectors and that is hitting
European currencies and lifting the dollar, while hopes for the
Obama administration helping the U.S. economy persist," said
Yasutoshi Nagai, senior economist at Daiwa Securities SMBC.
Japan's Nikkei average <> hovered near a two-month
closing low set on Friday, with investors spooked by dismal
earnings outlooks including a profit warning by construction
machinery maker Komatsu <6301.T>.
BLEAK EARNINGS
Bank shares including Japan's top lender Mitsubishi UFJ
Financial Group <8306.T> got an early lift after a jump in the
S&P Financial Index <.GSPF> on Friday on hopes the United
States would forge another rescue package for the ailing
financial sector. But they quickly pared their gains.
"A series of bigger-than-expected downward revisions that
came out last week is hitting stocks hard," said Takahiko
Murai, general manager of equities at Nozomi Securities.
"Investors are now trying to factor in the notion that
earnings may further deteriorate in the year to March 2010."
The dollar gained 0.4 percent to 89.13 yen <JPY> as traders
who sold it down to a 13-year low last week bought it back
ahead of the Fed meeting.
Sterling remained under pressure, falling 0.5 percent
against the yen <GBPJPY=R>, not far from last week's record low
and 1.09 percent against the dollar to $1.3650 <GBP=>, not far
from a 23-year trough set last week.
The euro shed 0.6 percent to $1.2903 <EUR=EBS>, holding
above a six-week low of $1.2764 set last week on the EBS
platform, when dismal British and euro zone data led investors
to shift money from European currencies to the U.S. currency.
Oil fell, cutting into a 14-percent three-day gain as
traders brushed aside the latest evidence of OPEC's production
cuts to focus on forecasts for a deepening global economic
downturn.
An International Monetary Fund official said at the weekend
the Fund would cut its 2009 global growth forecast to between 1
percent and 1.5 percent. [].
U.S. light crude for March delivery <CLc1> fell 68 cents to
$45.79 a barrel by 0300 GMT. The contract rose 6.4 percent on
Friday.
Gold inched down to hover below $900, pausing from a rally
late last week, when it rose 5 percent on strong investment
demand. By 0300 GMT, spot gold <XAU=> was down nearly 1 percent
at $891.55 an ounce against New York's notional close of
$898.10.
(Editing by Tomasz Janowski)
