* Euro hits 2-1/2-mth low vs dlr after warnings on bank ratings
* U.S. carmakers' survival plans have little impact on market
* Focus on U.S. housing, production data, Fed chairman's speech
* Yen buying on risk aversion may wane on Japan politics
By Kaori Kaneko
TOKYO, Feb 18 (Reuters) - The euro bounced back from its
lowest level in more than two months against the dollar on
Wednesday but worries remain about regional banks after warnings
from ratings agencies fuelled concern over the effects of a deep
recession in Eastern Europe.
Investors covered short positions after Societe Generale
<SOGN.PA> posted a quarterly net profit of 87 million euros ($110
million), which compared favourably with many rival banks that
have posted large losses. []
But the euro stayed under selling pressure due to the
financial crisis.
Moody's Investors Service threatened to downgrade euro zone
banks with significant exposure to the weakening economies in
Eastern and Central Europe, and Standard & Poor's said it may
review emerging Europe bank ratings. []
"With growing credit concerns in Europe, investors seem to be
continuing to unwind positions and securing cash in dollars,"
said Saburo Matsumoto, a senior manager at Sumitomo Trust
Banking.
The euro fell as low as $1.2558 on trading platform EBS, its
lowest since Dec. 4, before regaining ground to around $1.2617
<EUR=>, up 0.2 percent from U.S. trading on Tuesday.
The euro rose 0.2 percent to 116.50 yen <EURJPY=R>.
The market showed limited reaction to restructuring plans
submitted by U.S. auto giants as they offered no surprises,
traders said.
General Motors Corp <GM.N> requested up to $30 billion and
Chrysler LLC <CBS.UL> sought $5 billion in U.S. government aid
for their survival. []
The White House said on Tuesday it would carefully review the
plans but said it was clear more would be required of the
companies and stakeholders. []
"The market is waiting for the U.S. government's assessment
of the automakers' plans. There is a risk of dollar selling but
the dollar's reaction will depend on the review results," said
Yuji Saito, head of the FX sales department at Societe Generale.
The dollar was steady at 92.32 <JPY=> after it rose to a more
than one-month high of 92.75 yen on Tuesday.
Investors will be monitoring U.S. economic data including
housing market and industrial production figures later on
Wednesday for incentives.
U.S. housing starts are seen to have fallen to an annual pace
of 530,000 units in January from 550,000 in December and
inustrial output for the month is expected to have fallen 1.5
percent, according to Reuters polls.
Also on Wednesday, Federal Reserve Chairman Ben Bernanke is
scheduled to make a speech on the central bank's lending
programmes and its balance sheet, while minutes from the Fed's
January meeting will be released.
Traders said they would continue to watch the performance of
share prices, but falls might not prompt yen purchases on risk
aversion as much as in the past due to concerns about Japanese
political turmoil and the weakening Japanese economy.
Japan's finance minister resigned on Tuesday after being
forced to deny he was drunk at a G7 news conference, though the
resignation may not save unpopular Prime Minister Taro Aso or the
long-ruling party from voters' wrath. []
Japan's economy shrank sharply in the fourth quarter of 2008,
confirming the world's second-biggest economy is in a severe
recession, data showed this week. []
Tokyo's Nikkei share average <> fell 1.5 percent on
Wednesday.
(Editing by Michael Watson)
