* Dollar, yen up on uncertainty ahead of U.S. bank plan
* Euro hurt on report of Russia debt deal
* Geithner set to unveil bank plan outline at 1600 GMT
* Nakagawa warns on FX, suggests yen can't be singled out
(Changes byline, adds quotes, updates prices)
By Veronica Brown
LONDON, Feb 10 (Reuters) - The dollar rose against a basket
of currencies on Tuesday, while the yen also kept a firm tone as
investor nerves tightened before the U.S. government outlines a
widely anticipated plan to shore up its ailing banking sector.
The euro was undermined on conflicting reports that Russian
banks were seeking government help to restructure its foreign
corporate debt.
But investors were generally wary of taking large positions
ahead of the U.S. plan, aimed at helping banks offload their
so-called "toxic assets" and boost capital. U.S. Treasury
Secretary Timothy Geithner is expected to unveil the outline of
the plan at 1600 GMT.
The Obama administration is also waiting for Congress to
work out an $800 billion-plus economic stimulus package,
although a major hurdle was cleared in the Senate on Monday.
"The market is waiting to see not only what comes out of the
U.S. but the details of what comes out and how its implemented,"
said Phyllis Papadavid, currency strategist at SG in London.
"Although there might be some respite from yen strength
around Tim Geithner's testimony, the near to medium-term outlook
is clouded by the logistics of it," she added.
The dollar was up a quarter percent on the day against a
basket of major currencies at 85.067 <.DXY> by 1218 GMT.
The U.S unit was also higher against the Australian and New
Zealand dollars, up 2.2 percent <AUD=> and 1.2 percent <NZD=>,
respectively.
Yen strength pulled the dollar down 0.3 percent to 91.15 yen
<EURJPY=>, while the euro fell 0.6 percent to 118.34 yen
<EURJPY=>.
The yen briefly extended gains after Japan's Finance
Minister Shoichi Nakagawa told Reuters Japan would act
decisively against excessive forex moves, but suggested singling
out the strong yen in a Group of Seven communique would not work
while damage from the global economic crisis is spreading
[].
RUSSIA WOES
Earlier, the euro slipped more than one percent on the day
against the dollar and yen after Japan's Nikkei business daily
quoted Anatoly Aksakov, president of the Russian Association of
Regional Banks, as saying the industry group had submitted a
proposal to the Russian government to postpone loan repayments
of up to $400 billion in corporate debt owned to foreign banks.
[]
But Russia was quick to play down the report. Aksakov told
Reuters the Nikkei report was untrue. []
"The Nikkei report soured sentiment toward the euro," said
Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ,
adding: "Broad concerns about Russia and emerging European
countries will continue to weigh heavily on the euro because of
European banks' exposure to those regions."
The euro was down 0.25 percent at $1.2980, after falling to
$1.2811 <EUR=>, according to Reuters data.
The euro was also pressured after European Central Bank
Governing Council member Axel Weber said on Tuesday that
concerns about long-term effects of loose monetary policies
should not stop central bankers from cutting interest rates
aggressively in the current severe downturn.
The ECB last left key interest rates unchanged at 2 percent
but is expected to cut rates again next month.
Data also showed weakness in the euro zone economy. Italian
industrial output was down 2.3 percent in December from the
previous month, or down 14.3 percent year-on-year.
[]
The main focus, however, will be the U.S. financial
stabilisation and economic stimulus packages aimed at tackling
the recession in the world's biggest economy.
Three sources told Reuters the bank rescue package included
a public-private partnership that could buy up to $500 billion
worth of distressed assets, with private investors able to buy
bad assets through low-cost funding from the Fed or using
Federal Deposit Insurance Corp guarantees. []
(Editing by Ron Askew)
(veronica.brown@thomsonreuters.com; Tel: +44207 542 6745,
Reuters Messaging: veronica.brown.reuters.com@reuters.net))
