* Yen steady near two-year high vs euro
* Lehman reports keep investors nervous about volatile trade
* Dollar stays firm on global economic worries
* U.S. govt to arrange Lehman sale -Washington Post
By Satomi Noguchi
TOKYO, Sept 12 (Reuters) - The yen held steady near a
two-year high against the euro and stayed firm against other
major currencies on Friday as investors awaited more news about
Lehman Brothers ahead of a long weekend in Japan.
The dollar stayed near a one-year high against the euro on
fears the global economy, especially outside the United States,
would slow down.
The yen had slid sharply in late New York trade on Thursday
on reports that Lehman Brothers <LEH.N> was in talks about a
possible sale, with Bank of America <BAC.N> or Barclays <BARC.L>
named as potential suitors.
The reports drove a last-minute rebound in Wall Street
shares, but follow-through gains in Asian bourses were notably
sluggish.
Concerns over the state of Asian stock markets in the longer
term kept investors away from risk and carry trades, in which
the low-yielding yen has been used to fund investments in
higher-yielding currencies and assets.
"Intensifying worries about the global economy, especially
emerging markets, are what's driving the market, pushing up the
dollar and the yen with its low risk premium," said Hideki
Amikura, deputy general manager of the forex section at Nomura
Trust Bank.
"And more news about the fate of Lehman Brothers could make
market moves even more volatile," he said.
Traders said any new developments regarding Lehman could
alleviate worries about the U.S. financial sector woes
spreading, ease risk aversion and prompt investors to sell the
yen.
The Washington Post reported on Thursday that the U.S.
Treasury and the Federal Reserve were engineering a sale of
Lehman Brothers through a consortium of private firms.
[]
It said the announcement of a Lehman sale could come before
Asian markets open on Monday, when Japanese markets will be
closed for a national holiday.
The euro was flat against the yen at 150.13 yen <EURJPY=R>
after rebounding sharply from Thursday's low of 147.52 yen hit
on trading platform EBS, the lowest since August 2006.
The yen edged higher across the board, pushing the New
Zealand dollar, one of the high-yielding currencies favoured in
yen carry trades, down 0.5 percent to 70.05 yen <NZDJPY=R> and
back towards Thursday's low of 68.49 yen, its weakest in more
than two years.
The kiwi dropped 0.6 percent to $0.6535 <NZD=> as domestic
retail sales fell in July and reinforced views that the nation's
central bank will lower interest rates further after slashing
them to 7.5 percent on Thursday. It touched a two-year low of
$0.6438 in the previous day's trade.
Traders said a deteriorating global economic outlook and a
jump in market volatility convinced U.S. investors to close
their overseas investments and secure cash, giving a boost to
the dollar.
"The dollar has been the major beneficiary of the de-risking
process, as U.S. investors, perhaps the most active cross border
investors, bring capital home," Morgan Stanley currency analysts
said in a research note.
"But if the trend broadens and continues, the currencies
most likely to benefit are those of economies with current
account surpluses. We believe we are already seeing some
evidence of this on yen crosses," they added.
The euro dropped 0.2 percent to $1.4007 <EUR=> after
rebounding from a one-year low of $1.3882 hit on Thursday,
helped partly by comments by European Central Bank President
Jean-Claude Trichet that inflation remains the bank's key focus.
The dollar edged up 0.1 percent against the yen to 107.20
yen <JPY=>.
(Additional reporting by Shinichi Saoshiro)
