* Yen climbs despite sharp contraction in Japan's Q4 GDP
* Japan's Q4 GDP -3.3%, biggest quarterly fall since 1974
* Eyes on U.S. auto restructuring, housing rescue plans
By Kaori Kaneko
TOKYO, Feb 16 (Reuters) - The yen rose against other major
currencies on Monday after Group of Seven finance ministers made
no specific reference to the Japanese currency's strength at
their weekend meeting.
The yen edged up despite data showing Japan's economy had
shrunk sharply in the last three months of 2008, as investors
took the numbers as being largely within expected ranges,
analysts said.
Safe-haven flows also helped the Japanese currency as a fall
in Tokyo's Nikkei share average <> after the GDP results
kept investors cautious. The yen tends to gain amid rising risk
aversion.
"Without a (G7) mention of the yen's strength, caution about
Japanese intervention in the currency market eased and as a
result the dollar's gains were capped against the yen," said Yuji
Saito, head of the FX sales department at Societe Generale.
Japan's gross domestic product shrank 3.3 percent in
October-December or an annualised 12.7 percent, its sharpest fall
since the first oil crisis in 1974. []
Forecasts in a Reuters poll had been for a 3.1 percent
contraction on the quarter and an annualised drop of 11.7
percent.
The dollar was at 91.61 yen <JPY=>, down 0.4 percent from
late U.S. trading on Friday. The greenback fell as low as 91.43
yen on trading platform EBS after the GDP announcement.
The euro fell 0.7 percent to $1.2770 <EUR=> and dropped 1.1
percent to 117.02 yen <EURJPY=R>.
The pound <GBP=> fell 1.0 percent to $1.4235 and eased
against the euro after the G7 also made no mention of weakness in
the pound. The euro edged up 0.1 percent to 89.69 pence
<EURGBP=D4>.
In the run-up to the meeting in Rome, there had been
speculation that the finance chiefs might mention the rise in the
yen and the fall in sterling.
G7 members promised to make fighting recession and
stabilising financial markets their highest priority.
They softened their tone on the Chinese yuan while saying
they expected it to keep appreciating, but did not single out
other currencies. The language of the communique was almost
identical to their last statement in October.
For a factbox on the statement see []
"There is no mention of pound weakness, though reports
suggest Germany in particular would have liked to have included
one," said Matthew Strauss, a senior currency strategist at RBC
Capital Markets.
"Our perception is that the UK authorities are more than
happy to see the exchange rate fall and it is highly unlikely
that they would have sanctioned a statement that included any
reference to it."
The pound also came under pressure after Lloyds Banking Group
unveiled hefty losses related to its HBOS subsidiary,
underpinning risk aversion and prompting investors to stay wary
of high-yielding currencies like the Australian <AUD=> and New
Zealand dollars <NZD=>.
On Friday, data showed the euro zone economy had contracted
at a record pace in the last quarter of 2008, boosting
expectations that the European Central Bank will cut interest
rates at its March meeting. []
Traders also noted that media reports about financial
troubles in Eastern Europe and Russia kept investors worried
about the euro, given the heavy exposure of European banks to
that region.
"In addition to the weak GDP report in the euro zone, worries
about losses among banks in Europe ahead of the earnings season
are expected to emerge, which would put downward pressure on the
euro," said Societe Generale's Saito.
Investors were looking to cues from the U.S. including its
housing bailout and automaker restructuring plans this week.
The housing rescue plan is due to be announced by President
Barack Obama on Wednesday and is expected to break new ground by
helping troubled borrowers even before they miss a mortgage
payment. []
General Motors Corp <GM.N> and Chrysler LLC face a Tuesday
deadline to submit new restructuring plans under a $17.4 billion
federal bailout. []
(Additional reporting by Anirban Nag in Sydney; Editing by Chris
Gallagher)
