* Yen rallies as stocks fall, recession worries grow
* US jobless claims spike, dollar gains vs high-yielders
* Stocks slide; US automakers a key pressure point
* For up-to-the-minute market news, click on <FXNEWS>
(Updates prices, adds U.S. data, changes byline, dateline)
By Steven C. Johnson
NEW YORK, Nov 20 (Reuters) - The dollar fell against the
yen on Thursday but gained against high-yield currencies as
stock markets plunged and a spike in U.S. jobless claims added
to fears of a deepening global recession.
The Swiss franc <CHF=> also fell sharply after the Swiss
National Bank unexpectedly slashed interest rates by a full
percentage point, citing worsening economic conditions.
With anxiety about economic growth on the rise, investors
continued yanking money out of risky assets such as stocks,
commodities and high-yield currencies and parking it in U.S.
government bonds or Japanese yen, which many borrowed cheaply
to finance investments elsewhere.
These safe-haven flows pushed two-year U.S. Treasury yields
to a record low and pushed the high-yielding New Zealand dollar
<NZD=> to its lowest level against the greenback since 2003.
A report showing the number of Americans filing for
first-time jobless benefits spiked to 542,000 last week, more
than economists had expected, added to the unease
[].
"Anxiety about the financial markets is shifting to anxiety
about fundamentals and the real economy, and that's keeping the
overall levels of risk aversion very high," said Vassili
Serebriakov, currency strategist at Wells Fargo in New York.
"We've had disappointing U.S. economic data and we believe
the bear market in equities will continue, lending more support
to the dollar and yen."
The dollar was last down 0.9 percent at 95.01 yen <JPY=>
while the euro fell 0.9 percent to 118.92 yen <EURJPY=>.
The euro was little changed against the dollar at $1.2514
<EUR=>, while sterling fell 0.7 percent to $1.4858 <GBP=>.
Against the Swiss franc, the dollar rose 0.7 percent to $1.2200
<CHF=>, boosted by the SNB's surprise rate cut [].
Asian and European stocks fell sharply on Thursday and Wall
Street pointed to a weaker opening a day after the S&P 500
Index fell to its lowest level since early 2003 <.SPX>.
Analysts said investors remained nervous about the U.S.
automakers, which are seeking $25 billion in emergency loans
from Congress, and the viability of banking giant Citigroup
<C.N>, whose shares slid to a multiyear low on Wednesday.
The U.S. jobless data on Thursday intensified concerns and
signaled more trouble for the labor market, which has shed more
than 1 million jobs so far in 2008.
On Wednesday, a separate U.S. report revealed a record
decline in U.S. consumer prices in October, sparking fears of
deflation, a risk that Federal Reserve Vice Chairman Donald
Kohn said had increased.
The Fed also forecast the U.S. economy would contract in
the second half of 2008 and first half of 2009, raising the
prospect of a further reduction in the benchmark interest rates
from an already low 1 percent.
Major central banks have been slashing rates aggressively
in an attempt to boost their economies during an extreme
slowdown. Figures this month show that Japan and the euro zone
fell into a recession in the third quarter.
"People are starting to give up on the hope that the
economy is going to recover," said David Woo, head of currency
research at Barclays Capital in London.
All of that means continued gains for the dollar against
most currencies save the yen, said Alan Ruskin, international
strategist at RBS Greenwich Capital in Greenwich, Connecticut.
"I am disinclined to fight the risk aversion trade," he
said. "There are too many fires to put out -- a variety of
U.S. financial institutions in the spotlight and an auto sector
crying for help with time working against it.
(Additional reporting by Veronica Brown in London; Editing
by Chizu Nomiyama )
