FOREX-Dollar holds gains as credit worries ease

                                
 By Satomi Noguchi
                                
 TOKYO, April 2 (Reuters) - The dollar steadied against the
euro and the Swiss franc on Wednesday, keeping sharp gains made
the previous session on hopes that the latest rash of bank
writedowns has marked the worst of the credit crisis.
                                
 Traders said worries about the fate of financial firms had
eased somewhat after Lehman Brothers <LEH.N> raised $4 billion to
shore up its balance sheet, providing a boost to the dollar.
                                
 "The market has become somewhat confident that banks can
overcome this crisis," said Kosuke Hanao, head of forex sales at
HSBC.
                                
 "The dollar's rebound may continue for a month."
                                
 The euro was little changed from its level in late New York
trade at $1.5590 <EUR=>, in sight of Tuesday's one-week low
around $1.5560 and well below a record high of $1.5905 hit last
month.
                                
 The dollar steadied against the Swiss franc at 1.0130 francs
<CHF=> after climbing to around 1.0140 francs the previous
session, off an all-time low near 0.9600 francs struck in March.
                                
 The dollar edged up 0.1 percent to 101.92 yen <JPY=>. Traders
said heavy selling from Japanese exporters capped the dollar's
gains after jumping above 102 yen on Tuesday for the first time
since early March. The U.S. currency had plunged to a 13-year low
of 95.77 yen in March 17.
                                
 Investors had been nervous that other financial firms could
go the way of Bear Stearns <BSC.N>, which nearly collapsed last
month amid a liquidity crisis.
                                
 But a $19 billion writedown by Swiss bank UBS <UBSN.VX>
reinforced the view that the banks were aggressively scrubbing
their books clean of soured investments tied to the slumping U.S.
housing market. UBS also said it would raise $15 billion in fresh
capital through a rights issue of shares.
                                
 ECON WORRIES TO STAY
                                
 Still, some warned the U.S. currency may be in for renewed
selling unless upcoming data begins to paint a sunnier picture of
the U.S. economy.
                                
 "The dollar may be getting a boost in the near term as money
starts to get around on easing concerns about credit problems,
but over the longer term, the focus will again turn to
fundamentals, which will weigh on the dollar," said Osamu
Takashima, chief forex analyst at Bank of Tokyo-Mitsubishi UFJ.
                                
 On Tuesday, data from the U.S. Institute for Supply
Management showed a continued contraction in the manufacturing
sector while prices jumped to their highest since 2005.
[ID:nN01224839]
                                
 If employment data due on Friday shows the U.S. economy shed
jobs for a third straight month in March, analysts said the
dollar could fall back towards record lows against the euro and
the Swiss franc.
                                
 "There won't be any question about the dollar starting to
fall again after the U.S. jobs data, especially when the market
is swinging between extreme pessimism and optimism," said Kengo
Suzuki, a currency strategist at Shinko Securities.
                                
 For clues about the jobs data, investors will look to a
report on private sector employment from Automatic Data
Processing (ADP) due later in the day.
                                
 The ADP report is expected to show that private sector
employment shrank by 48,000 jobs in March.
                                
 Also on Wednesday, Federal Reserve Chairman Ben Bernanke is
scheduled to testify on the economic outlook, though analysts
expect it to offer few surprises.
 (Additional reporting by Shinji Kitamura and Chikako Mogi;
Editing by Chris Gallagher)