* Easing in risk aversion leads dollar, yen lower
* UK to unveil 2nd bank rescue, Obama to tweak bank bailout
* Trade subdued with U.S. markets closed
By Satomi Noguchi
TOKYO, Jan 19 (Reuters) - The dollar and the yen fell on
Monday as Asian shares tracked U.S. stocks higher on hopes for
bold economic measures from the incoming U.S. administration,
further reducing safe-haven flows into the currencies.
President-elect Barack Obama is set to take office on Tuesday
following a U.S. national holiday on Monday, and many investors
have been hoping he will act aggressively to help pull the
economy out of recession.
Market participants also took heart in news that the incoming
U.S. administration will make its bailout funds work harder to
get credit flowing again to cash-starved consumers and companies,
while Britain is set to announce its second bank rescue plan
later in the day. []
"The policy actions to rescue the financial sector have been
going in the right direction and any additional move will be
welcomed," said Koji Fukaya, senior currency strategist for
Deutsche Securities in Tokyo.
Obama's senior adviser David Axelrod said the new team would
soon change way the second half of the $700 billion bank rescue
scheme was used, to make it more effective.
Britain, which has already pumped 37 billion pounds into its
banks, is poised to guarantee banks' "toxic debt" up to 200
billion pounds ($296 billion) and allow them to insure against
steep losses in the second rescue in four months, sources said.
[]
The euro climbed 0.6 percent to $1.3347 <EUR=> after rising
as high as $1.3387 on trading platform EBS, the highest in a
week. The euro gained 0.7 percent to 121.10 yen <EURJPY=R>,
staying close to a one-week high of 122.20 yen struck earlier in
the day on EBS.
The dollar index <.DXY>, which measures the performance of
the greenback against a basket of six major currencies, was down
0.6 percent at 83.671.
The dollar edged up 0.1 percent to 90.83 yen <JPY=>, near a
one-week high of 91.31 yen on EBS touched earlier in Asian trade.
Sterling gained against the dollar and the euro ahead of the
expected announcement from Britain's Prime Minister Gordon Brown
later in the day on the launch of the second bank rescue plan.
The pound rose 1.1 percent to $1.4887 <GBP=D4>. The euro
dipped 0.2 percent against the pound to 89.70 pence <EURGBP=D4>.
Gains in equity markets helped calm investors' risk aversion
and boosted higher-yielding currencies such as the Australian and
New Zealand dollars.
The Aussie climbed 1.2 percent to $0.6811 <AUD=> and against
the yen gained 0.5 percent to 61.85 yen <AUDJPY=R>.
The New Zealand dollar rose 0.9 percent to $0.5532 <NZD=D4>
and 0.2 percent to 50.15 yen <NZDJPY=R>.
GLOBAL ECONOMY WORRIES
Analysts said the currency market remained cautious about the
sustainability of gains in share prices as the global economy is
still in a severe situation. Trade was also quiet as financial
markets in the United States were closed on Monday for Martin
Luther King Day.
"There have been expectations for the new administration. The
issue is the actual details of the economic stimulus package,"
said Kazuyuki Kato, treasury department manager at Mizuho Trust &
Banking. "The market can be volatile as not everyone is sure
about the details."
In Washington, one of the options discussed by the Federal
Reserve, the Treasury and the Federal Deposit Insurance Corp is a
government-run "aggregator bank" that would absorb toxic debt
weighing down banks' balance sheets.
Obama is also working with lawmakers to launch by
mid-February a $825 billion fiscal stimulus plan.
(Additional reporting by Kaori Kaneko; Editing by Chris
Gallagher)
