* Yen slips amid Japan monetary easing expectations
* Pound weakened by surprise drop in industrial output
* Euro up vs dollar; Greece comments add to positive view
(Recasts, updates prices, adds comment, byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, March 10 (Reuters) - The dollar slipped against
the euro while the yen fell on Wednesday, as risk appetite
improved in general with a rise in European and U.S. stocks,
boosting demand for higher-yielding but riskier currencies.
The dollar and yen, however, gained some traction after
risky assets such as gold, oil, and U.S. stocks fell from
highs.
"It's still a risk play. We saw gold and oil come off and
that caused the dollar and yen to recover a bit, but overall
the euro is still higher and dollar/yen is still up," said John
McCarthy, director of foreign exchange at ING Capital Markets
in New York.
He said the market is still in a "buy dollar" mode, "but
selectively," with investors still taking long bets on the
greenback versus the euro and sterling, but not against the
likes of the Norwegian and Swedish crowns.
A Reuters story that Japan's central bank may ease policy
as early as next week pushed the yen to lows against the dollar
and the euro. Looking forward, yen repatriation flows are
expected to benefit the Japanese currency, as Japan's
corporations looked to bring offshore earnings back home for
their fiscal year-end this month.
"In an environment where there is not a definite theme, the
Bank of Japan looms large," said Matthew Strauss, senior
currency strategist at RBC Capital Markets in Toronto.
The BoJ is leaning toward easing monetary policy again next
week, sources said, but there is disagreement among policy
makers on its board on how to justify such a move.
The dollar <JPY=> was up 0.6 percent versus the yen at
90.54 yen, after climbing as high as 90.82, according to
Reuters data.
In early afternoon trading, the euro <EUR=> rose 0.4
percent to $1.3648, after hitting a session low of $1.3546 and
a peak of $1.3679.
Trading in the euro was volatile with the single currency
swinging between gains and losses against the dollar. The euro
rallied 0.9 percent against the yen <EURJPY=> but that was more
on yen weakness.
Comments on Wednesday from European officials about Greece,
including from Greek Prime Minister George Papandreou, had
little impact on the euro. Those remarks, though, did add to
the overall view that Greece's debt crisis may be easing. For
Papandreou remarks, see [].
The pound, meanwhile, already under pressure, dipped after
an unexpected drop in British industrial production data for
January.
Sterling <GBP=> was down 0.3 percent at $1.4956,
maintaining its downtrend amid worries about Britain's
credit-worthiness and political uncertainty. Wednesday's weak
industrial data added to the gloom.
Commodity-linked currencies, meanwhile, rose after China
reported on Wednesday that exports and imports surged past
expectations in February, underscoring the momentum in the
world's third-largest economy.
The Australian dollar <AUD=> rose to a seven-week high
against the U.S. dollar, according to Reuters data, but fell to
trade little changed at US$0.9145.
The New Zealand dollar rose to a five-week high. It last
traded at US$0.7055 <NZD=>, up 0.4 percent. New Zealand's
central bank is expected to keep interest rates unchanged when
it announces its policy decision later in the day.
(Additional reporting by Nick Olivari; Editing by Leslie
Adler)
