* Dollar extends losses, hits 1-year low vs currency basket
* Euro/dlr hits 9-month high, dollar/yen plumbs 7-mth trough
* Fujii: Strong yen has merits for Japanese economy
(Updates prices, adds details)
By Naomi Tajitsu
LONDON, Sept 16 (Reuters) - The dollar slumped to a one-year
low against a currency basket on Wednesday after higher global
shares and gold prices cranked up risk appetite and boosted
currencies seen as being riskier to hold than the greenback.
The yen rallied to a seven-month high against the
beleaguered dollar after Japan's incoming finance minister said
a strong yen had advantages for the nation's economy.
Underlining dollar weakness, the euro rallied to a
nine-month high around $1.4715, a move analysts said was an
extension of ongoing negative sentiment on the U.S. currency,
whose safe-haven status has diminished on the view the global
economy is improving.
"The general dollar-selling trend remains in place," said
Lauren Rosborough, senior currency analyst at Westpac in London,
noting that traders were focused on $1.4720, above which would
be the euro's highest since September 2008.
"The $1.4720-1.4750 region should be capped in the short
term, but once we get into New York trade the tendency will be
to push the dollar lower."
By 1117 GMT, the euro <EUR=> traded at $1.4676, inching down
from the day's high but hovering 0.1 percent higher on the day.
The single European currency offered little reaction to
figures confirming euro zone consumer prices fell 0.2 percent
year-on-year, in line with forecasts [].
The dollar index <.DXY>, which tracks its performance
against a basket of six major currencies, fell as low as 76.187,
its weakest level in a year.
YEN RALLIES
The dollar <JPY=> fell 1 percent on the day to 90.12 yen
according to electronic trading platform EBS.
The rate plumbed its weakest level since mid-February after
incoming Finance Minister Hirohisa Fujii said he was opposed to
currency intervention if movements were gradual, while adding
that current moves were not rapid. []
"The comments suggest the new government is not as keen to
interfere in the market as the old one was," said Johan Javeus,
chief currency strategist at SEB in Stockholm. "It seems this
has given a go ahead signal to the market that it's OK for the
yen to strengthen."
Still, he added Fujii's comments that he opposed currency
intervention if movements were not rapid suggested the new
government, like the old one, remained concerned with the speed
of yen appreciation.
Analysts have said traders remain cautious about pushing the
yen too high due to lingering concerns Japan may act to stem the
yen's strength, as they did in a massive intervention campaign
in 2003-2004.
Such concerns may limit yen gains around 87 yen, a level hit
earlier this year for the first time since 1995.
Market participants said traders were pushing dollar/yen
lower in an attempt to test 90.00 yen, which was believed to be
lined with options-related barriers.
European shares <> rallied 1.2 percent on the day
after upbeat U.S. economic news on Tuesday boosted the appeal of
riskier assets leveraged to global growth, stinging the dollar.
Gold prices <XAU=> climbed as high as $1,020.20, their
highest since March 2008. Analysts pointed out that, as gold is
priced in U.S. dollars, it was natural for the price of the
precious metal to move inversely with the dollar.
Traders awaited readings of the U.S. consumer price index
(CPI) for August, second-quarter current account data, August
industrial production numbers and September NAHB housing data
due later in the day.
Analysts said strong readings may further fuel risk demand
and push the dollar lower.
(Additional reporting by Emelia Sithole-Matarise; Editing by
Toby Chopra)
