* Yen down vs euro, dlr as risk aversion eases up
* High-yielders such as Aussie dollar <AUD=> bounce back
* Market eyes G7 for more action after rate cuts
(Recasts, adds quotes, changes byline, changes dateline,
previous LONDON)
By Wanfeng Zhou
NEW YORK, Oct 9 (Reuters) - The U.S. dollar rose sharply
against the yen on Thursday as some calm returned to financial
markets a day after coordinated global interest-rate cuts,
triggering a temporary bounce in risk appetite.
As extreme risk aversion receded, the low-yielding,
safe-haven yen fell from a three-year high against the euro and
a six-month peak versus the dollar hit in the previous session.
High-yielding currencies such as the Australian and New Zealand
dollars shot higher after tumbling in the previous session.
"The stocks overnight had a bit of a rally...and that's
given the dollar/yen a little of a boost," said Steven Butler,
director of FX trading at Scotia capital in Toronto. "When you
start getting down below 100 dollar/yen, people are little bit
cautious about getting too far extended long yen at those
levels."
In early trading in New York, the dollar was up 2.1 percent
at 101.37 yen <JPY=> after hitting a session high of 101.47,
according to Reuters data. The euro was up 2.3 percent at
138.35 yen <EURJPY=>
But analysts cautioned the situation remained tenuous as
investors waited for signs that governments could take further
steps to stabilize the global banking system, with the focus
shifting to a meeting of Group of Seven (G7) finance ministers
and central bankers on Friday.
"The market is trying to feel better today, but it's a
struggle to have a whole lot of confidence. I'd love to see
credit markets ease a bit, but lending remains tight, so I'm
not too comforted," Butler said.
"For now, I expect people to remain very cautious, the
markets remain very jittery and volatility is going to remain
very high," he added.
The euro also regained some ground against the dollar
<EUR=>, rising 0.4 percent to $1.3689.
The high-yielding Australian dollar <AUD=> was up 7.2
percent against the U.S. dollar at US$0.7111, after hitting a
five year low on Wednesday. The New Zealand dollar rose 3.5
percent to US$0.6214 <NZD=>.
Against the yen, the Aussie dollar rose 7.6 percent to
71.43 <AUDJPY=R> and the kiwi was up 4.4 percent at 62.5
<NZDJPY=R>.
NEXT RISK EVENT: G7
Markets are looking to the G7 meeting, as well as a broader
meeting of G20 countries over the weekend, for a more
coordinated approach to the global financial crisis.
U.S. Treasury Secretary Henry Paulson suggested on
Wednesday the United States may follow in Britain's footsteps
and inject capital into banks to strengthen their balance
sheets.
But a British proposal to provide guarantees on interbank
lending may meet resistance.
"What is needed is a coordinated plan, they need to agree
on a broad set of principles," said Adarsh Sinha, currency
strategist at Barclays Capital in London.
"If they can show that, then it will be a positive, but if
they fail, we will see more of the turmoil."
Markets also expect central banks around the world to cut
rates further after the Fed, the ECB and the central banks of
Canada, England, China, Sweden and Switzerland cut rates
simultaneously on Wednesday.
"Having embarked on this easing cycle, all of the central
banks will find it difficult to pull back now," said Calyon
strategists in a research note.
Markets will also keep an eye on further measures by
central banks to revive frozen money markets.
(Additional reporting by Steven C Johnson in New York and
Tamawa Kadoya in London, Editing by Chizu Nomiyama)
