Monday February 23, 2009 - 12:17:55 GMT
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Reuters - www.reuters.com
FOREX NEWS-Yen falls broadly as Citi report boosts stocks
* Yen falls broadly as stocks gain on Citi report
* Dollar hits 3-month high vs yen of 94.93 <JPY=>
* Euro cuts gains vs dollar after Trichet, Fitch comments
(Recasts, updates prices, adds quotes)
By Jessica Mortimer
LONDON, Feb 23 (Reuters) - The yen fell broadly on Monday,
with the dollar hitting its highest in nearly three months, as
stocks gained on a report that the U.S. government could end up
owning up to 40 percent of embattled lender Citigroup.
This weighed on the yen in particular, while the dollar also
fell against currencies other than the yen as the Citi report
encouraged market players to buy back into assets perceived to
be higher risk.
The euro cut gains against the dollar, however, after
European Central Bank president Jean-Claude Trichet said the
euro zone financial system is under severe strain [ID:nLN456587]
and Fitch voiced concern about Austria's AAA rating
European shares rose 0.7 percent .FTEU3 after the Wall
Street Journal said the U.S. government would take the stake in
Citigroup by converting preferred stock into common stock
"We've had a move which has been developing for a period of
time. We've seen a degree of equity market stability - the
(bank) nationalisation story is still there," said Derek
Halpenny, European head of global currency research at BTM-UFJ.
He also noted that the Japanese currency remains under
pressure as investors consider that a deteriorating Japanese
economic and political outlook are hurting its perceived
"Now there's a risk that we're going to see some unwind of
some of that (recent) yen buying," he said.
Investors hoped the Citigroup move would mark a step in the
right direction as the U.S. attempts to stave off a deep
recession, while it also helped to ease fears that the U.S.
government will have to fully nationalise some big banks.
At 1141 GMT, the dollar rose 1.8 percent to 94.80 yen
<JPY=>, just below an earlier near three-month high of 94.93
The euro rose 1.9 percent to 121.72 yen <EURJPY=R> just
below a one-month high of 121.89 yen.
EURO/DOLLAR CUTS GAINS
The euro cut gains against the dollar, trading flat on the
day at $1.2836 <EUR=> after earlier jumping to a 12-day peak of
Analysts said Trichet's comments brought back into focus the
economic and banking woes in the euro zone, while the Fitch
comments highlighted the problems facing some of the countries
on the region's periphery.
"I was surprised how strong the euro was right at the start
of the European session on the Citigroup news. This is
potentially just based on reports so far," Chris Turner, head of
forex strategy at ING said.
Traders said market players were wary of more bad news
emerging about the euro zone economy, with the closely-watched
Ifo index on the German economic climate due on Tuesday.
Analysts also noted disappointment that the weekend's
meeting of G20 leaders failed to yield any concrete agreement on
ways to deal with the recession [ID:nLM126747].
"There was disappointment that the main focus of the G20
meeting was on financial market regulation, which is not the
most important problem at a time of global recession,"
Commerzbank head of FX research Ulrich Leuchtmann said.
(Reporting by Jessica Mortimer; additional reporting by
Veronica Brown and Farah Master)
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