* Dollar dips vs euro, but up vs yen on GSE bailout plan
* Dollar softens as economic worries persist
* Yen hit across the board after last week's surge
By Satomi Noguchi
TOKYO, Sept 8 (Reuters) - The dollar fell against the euro
but climbed on a sliding yen on Monday after the U.S. government
seized control of mortgage companies Fannie Mae <FNM.N> and
Freddie Mac <FRE.N> to shore up the U.S. housing market and
prevent the spread of global financial turbulence.
The yen was the major loser as the move seemed to lessen one
major risk to global financial markets and the U.S. economy,
reversing last week's broad surge on a flight to safety.
The takeover on Sunday of the two mortgage giants, which own
or guarantee half of the country's $12 trillion in outstanding
home mortgage debt, followed growing concern about the mounting
losses at both, undermining the lenders as other sources of home
lending have dried up. []
Still, the impact of the rescue package on the U.S. economy
may be limited and the outlook for the dollar is unclear after
data on Friday showed a jump in the unemployment rate as the
economy lost jobs for the eight month in a row, analysts said.
"Much of the dollar's gains against the yen owes to the
Japanese currency retreating against other currencies," said
Takahide Nagasaki, chief forex strategist at Daiwa Securities
SMBC.
"The yen's weakness, and thus the dollar's strength, is a
result of negative sentiment being soothed by the GSE rescue
plan."
Market watchers said the rise in oil and commodities prices
on Monday was a sign that investors' appetite for risk had
improved slightly on the GSE bailout.
Oil prices rose almost $3 and poked above $119 on Monday
<CLc1>, but the jump was also attributed to concern that
Hurricane Ike could damage oil facilities in the Gulf of Mexico.
[].
The dollar climbed 0.9 percent to 108.75 yen <JPY=> after
touching 109.05 on EBS.
The euro rose 0.9 percent to $1.4401 <EUR>, off an 11-month
low of $1.4197 touched last week.
The dollar index, which tracks the value of the greenback
against a basket of six currencies, slipped 0.2 percent to 78.327
<.DXY>.
YEN HIT
The yen had shot higher and hit a two-year high against the
New Zealand dollar and a near five-year high versus sterling last
week as intensifying risk aversion led investors to dump
leveraged carry trades funded in the Japanese currency.
Now some of that process is reversing, knocking the yen
broadly lower while boosting the euro and commodity currencies
like the Australian dollar.
"The news was seen as supportive for the U.S. financial
sector and this triggered widespread buying back of short yen
cross positions," said Bank of New Zealand currency strategist
Danica Hampton.
Japanese Finance Minister Bunmei Ibuki said on Monday the
U.S. move would be positive for the global economy. Ibuki also
said Paulson would explain the mortgage lenders rescue package to
the G7 finance ministers later Monday. []
The euro jumped to 156.61 yen <EURJPY=R>, up 1.9 percent from
late in New York on Friday, and shot as high as 157.02 yen on
trading platform EBS in early Asian trade.
The Australian dollar jumped 2.7 percent to 90.31 yen
<AUDJPY=R>, sharply above a two-year low of 84.98 yen hit last
week.
The high yielding New Zealand and Australian currencies
recouped some of their recent sharp losses as risk aversion
calmed slightly.
The kiwi <NZD=> jumped 1.9 percent to $0.6813 and the Aussie
<AUD=> gained 1.8 percent to $0.8304.
Reserve Bank of Australia Governor Glenn Stevens gave his
semi-annual testimony to lawmakers on Monday and left the door
open for further interest rate cuts but suggested any easing
would be cautious given stubbornly high inflationary pressures.
[]
The governor's comments were a touch less dovish than
expected, analysts said. The RBA cut its key cash rate by 25
basis points to 7.0 percent last week, its first easing in seven
years.
(Additional reporting by Masayuki Kitano and Shinichi Saoshiro
in Tokyo and Gyles Beckford in Wellington newsroom; Editing by
Chris Gallagher)
