* U.S. Congress, Obama administration reach stimulus deal
* Dollar rises vs yen, little changed vs euro
* Sterling falls sharply on BoE outlook (Recasts; updates prices)
By Nick Olivari
NEW YORK, Feb 11 (Reuters) - The U.S. dollar was little changed against the euro, but higher against the yen in a volatile session on Wednesday amid signs the U.S. Senate and House of Representatives will be able to bridge their differences on economic stimulus plans.
Wall Street stocks rose on the news late in the New York session amid rising risk appetite, reducing some demand for the dollar as a safe-haven currency. While investors said they feel negotiators still have work to do, the dollar closed well off the session's lows.
The U.S. Congress and Obama administration reached a deal on Wednesday on a $789 billion economic stimulus package that would mix tax cuts and new government spending in an effort to rescue the faltering U.S. economy. For full story, see [ID:nN11379390]
"We are seeing stocks jump on the stimulus deal and in turn that takes some of the demand for the dollar as a haven off the table a bit," said Matt Esteve, a foreign exchange trader at Tempus Consulting in Washington. "Having both Senate and House reaching an agreement is obviously a positive for the U.S. economy."
The dollar was last up 0.1 percent against the yen at 90.38 yen <JPY=> after moving as high as 90.75 yen and as low as 89.72 yen.
The euro last traded near flat against the dollar at $1.2894 <EUR=>, but off the session low of $1.2834. The euro had traded as high as $1.2999.
Votes on the final stimulus bill could come as early as Thursday. Senators said more than a third of the bill was dedicated to middle class tax cuts and it would create 3.5 million jobs.
Prior to the announcement, the dollar had been trading higher bolstered by a safe-haven bid, with investors remaining uncertain about the final size and scope of the U.S. stimulus package.
The general consensus was that the U.S. bank bailout plan unveiled on Tuesday -- which could total over $2 trillion -- covered the key areas needed to stem the hemorrhaging in the banking sector. But it lacked fresh details and gave the markets little confidence that the Obama administration was doing anything much different from its predecessor to help end the financial crisis.
Treasury Secretary Timothy Geithner on Wednesday testified before Senate Budget Committee about the U.S. government's financial rescue plan and addressed the issue about the lack of details in the package.
"I understand the desire for details, I understand the disappointment about lack of details today," said Geithner.
"But part of the disappointment as I said at the beginning is because people were hoping that we were going to do things that in my judgment would have been too generous and not responsible with the taxpayers' money." [ID:nN11366273]
Sterling, meanwhile, fell against major currencies after a Bank of England report opened the way for further monetary easing.
The BoE's quarterly Inflation Report showed the central bank predicting inflation receding sharply below target. The bank's Governor Mervyn King said the projections suggested further monetary easing -- possibly including buying gilts -- may be required. [ID:nLB316187]
The euro was up 0.9 percent against the pound at <EURGBP=> at 89.60 pence, having hit a session high of 90.29 pence. Sterling <GBP=> traded 0.9 percent lower against the dollar at $1.4383. (Additional reporting by Vivianne Rodrigues; editing by Gary Crosse) (Reporting by Nick Olivari and Gertrude Chavez-Dreyfuss)