* Dollar falls vs yen, struggles vs euro
* Bernanke dashes expectations of early stimulus exit
* More dollar shorts to be covered, but dollar seen weak
(Releads, adds comment, updates throughout; previous TOKYO)
By Naomi Tajitsu
LONDON, Dec 8 (Reuters) - The dollar fell against the yen
and struggled versus the euro on Tuesday after comments from
Federal Reserve Chairman Ben Bernanke cooled speculation of an
early rise in U.S. interest rates.
The U.S. currency gained some ground against the euro early
in Europe as a trickle of dollar short covering continued in the
wake of better-than-expected U.S. jobs data last week, but the
dollar stayed on the back foot as another senior Fed official
said the U.S. economy remained weak.
Bernanke said the U.S. economy still faced headwinds and
unemployment could stay high for some time, playing down the
impact of Friday's payrolls report and helping send yields on
shorter-dated Treasuries lower. [].
William Dudley, president of the New York Federal Reserve,
later said the economy was still weak and reiterated that rates
would remain low for an extended period. []
"Bernanke's speech was dovish, and he suggested there would
not be an immediate rate rise," said Marcus Hettinger, global
currency strategist at Credit Suisse in Zurich.
"There are more short dollar positions to cover, but we
still see the currency weaken."
Dollar gains have petered out following a rally from late
last week, when a surprisingly strong reading of U.S. employment
had triggered some expectations the Fed may start to normalise
ultra-easy monetary policy earlier than expected.
By 0847 GMT, the euro <EUR=> was down slightly on the day at
$1.4810, having slipped to around $1.4780, but above a five-week
low of $1.4756 hit on Monday.
Traders awaited German industrial output data due at 1100
GMT, which is expected to show a 1.0 percent rise in October
from the previous month. Data last month showed output grew in
the third quarter at its fastest rate since reunification.
Some analysts said a weak reading may put some selling
pressure on the euro.
The euro offered limited initial reaction to comments from
European Central Bank President Jean-Claude Trichet, who said on
Tuesday said the euro zone faced a bumpy road to recovery.
[]
On Monday, he said the ECB could pause the process of
withdrawing emergency support measures for the economy if
needed. []
Against the yen, the dollar <JPY=> fell half a percent to
89.01 yen. The dollar hit a 14-year low of 84.82 yen at the end
of November as worries about Dubai's debt saw investors unwind
risk trades funded in yen, which then sent dollar/yen down.
"It was unreasonable that U.S. non-farm payrolls for a
single month alone raised such optimism, as concerns persist
over Dubai debt problems and the U.S. banking sector is not
necessarily in good condition," said Jun Kato, senior chief
analyst at Shinkin Central Bank Research Institute in Tokyo.
A Dubai newspaper reported state-controlled Dubai World was
discussing a new date with its bank creditors for debts maturing
on Dec. 14. []
Sterling <GBP=D4> fell roughly half a percent to the day's
low of $1.6376 as the market awaited the UK government's
pre-budget report on Wednesday, which is expected to highlight
the dismal state of the Britain's finances.
(Additional reporting by Tokyo Forex Team, editing by xxx)
