* Yen steady vs dollar on worry over global recession
* Bleak Japan industrial data adds to concerns
* Talk of Japan insurers repatriating funds boosts yen
* Mumbai attacks unleash security fears, hurt dollar
By Satomi Noguchi
TOKYO, Nov 28 (Reuters) - The yen kept its strength against
the dollar in thin trade on Friday as fears of a long and deep
global recession continued to highlight the relative safety of
the low-yielding Japanese currency.
Japanese industrial production slid more than expected in
October and manufacturers warned of record cuts ahead, in bleak
news that points to more trouble for an economy already in
recession. []
Traders also cited talk of Japanese life insurers
repatriating funds, giving a boost to the yen.
The dollar, normally a beneficiary of greater risk aversion,
slipped versus a basket of major currencies after militants
killed more than 100 people in Mumbai, India's financial centre,
in coordinated attacks. []
The assault stirred memories of the Sept. 11, 2001, attacks
on the World Trade Center in New York, feeding geopolitical
concerns and prompting some players to reduce exposure to the
dollar, traders said.
But activity remained slow before U.S. markets reopen later
in the day after the Thanksgiving holiday, and price movements in
Asia were confined to a tight range due to month-end flows,
traders said.
"The market is wavering between decisive trends with too many
factors to digest," said Minoru Shioiri, chief manager of foreign
exchange trading at Mitsubishi UFJ Securities.
"In such market conditions and thin liquidity, only flows
from corporations and such will provide direction," Shioiri said.
The dollar was trading at 95.30 yen <JPY=>, down slightly
from late European trade on Thursday, when it was around 95.41
yen.
Demand from Japanese companies who needed to pay for imports
at the end of the month briefly lifted the dollar to the day's
high of 95.61 yen, but sell orders from Japanese exporters
repatriating overseas earnings pushed it back down, traders said.
Market players are braced for interest rate decisions by
several central banks next week, including the Bank of England,
the European Central Bank, the Reserve Bank of Australia and the
Reserve Bank of New Zealand.
The question is whether any of them will surprise with bold
rate cuts.
"As the interest rate gap between Japan and other major
economic zones is in a narrowing trend, it's obvious that
investors will stay away from yen carry trades," said a trader at
a Japanese bank.
In such carry trades investors borrow cheaply in yen and use
the funds to invest in higher-yielding currencies.
But mounting global economic worries have prompted
risk-averse investors to keep quitting carry trades, helping to
keep the yen firm against a broad range of currencies, traders
said.
The euro was little changed at 123.05 yen <EURJPY=R>,
compared to 122.92 yen in late London trade.
The euro was steady at $1.2914 <EUR=> while the dollar
slipped against a basket of currencies to 85.524 <.DXY>, from
around 85.671 in late European trade.
(Additional reporting by Kaori Kaneko; Editing by Michael
Watson)
