* Dollar advances against most majors on safe haven bid
* Risk aversion high despite Obama's optimistic tone
* Lower U.S. housing sales help dollar's safe-haven appeal
(Recasts, updates prices, adds comment)
By Nick Olivari
NEW YORK, Feb 25 (Reuters) - The dollar rose on Wednesday
as investors remained averse to risk even as key U.S.
officials, including President Barack Obama, sounded a more
optimistic tone.
Late on Tuesday, in his first speech to Congress, Obama
tried to reassure Americans the country would emerge stronger
from the financial crisis, but analysts said he shed little
light on how his administration would stabilize the economy.
For more see [].
The dollar extended gains against the euro on Wednesday,
after data showed the pace of sales of existing U.S. homes fell
5.3 percent in January. []. The housing report
also helped send U.S. stocks lower. [].
"The negative housing data -- the lack of any bottom in the
plummeting housing market -- along with sharply lower stocks
this morning have rekindled the demand for safe-haven dollar
assets," said Omer Esiner, senior market analyst at Ruesch
International in Washington. "So we're seeing the dollar rally
to highs of the day against the euro, sterling, Canadian dollar
and a number of its major rivals."
Midway through the New York session, the euro was down 0.7
percent against the dollar at $1.2746 <EUR=>, after earlier
touching a session low of $1.2691. Sterling was down 1.5
percent at $1.4260 <GBP=>.
Obama's address to Congress followed testimony by Federal
Reserve Chairman Ben Bernanke on Tuesday to a congressional
committee that the significant value built up in the country's
banks would be lost if the government owned them, easing
investor fears that shareholders would be wiped out if the
banks were nationalized.
Bernanke's prepared testimony to the House Financial
Services Committee on Wednesday was identical to the previous
day. [].
The dollar has been in demand as one of the last safe-haven
currencies at a time of global economic uncertainty and risk
aversion even as the U.S. suffers its own economic problems.
Any optimism that the global economy could be recovering,
however, should prompt investors to sell the dollar and buy
riskier assets and currencies.
"A more optimistic tone from U.S. President Obama as well
as Bernanke has not triggered a sharp rally in the euro or the
pound," said Marc Chandler, global head of currency strategy at
Brown Brothers Harriman in New York, in a note to clients. "The
euro continues to be weighed down by problems in the euro
zone."
Data on Wednesday showed Germany's economy contracted by a
record 2.1 percent in the fourth quarter, dragged down by
foreign trade. [].
Separately, revised data showed Britain's economy shrank an
unrevised 1.5 percent in the three months to December.
[].
YEN GAINS/FALLS
The yen, which had been one of the few other bright spots
in foreign exchange markets on Wednesday, reversed direction
and fell against the dollar as the New York session progressed.
The dollar was last up 0.5 percent against the yen at 97.30 yen
<JPY=>.
"There are a number of themes running through the market
and it just depends on which is being focused on," said John
McCarthy, director of foreign exchange at ING Capital Markets
in New York. "You look at the data out of Japan and they have
some serious problems."
Japan's exports nearly halved in January from a year
earlier, with record slides in shipments to the United States,
Europe and the rest of Asia pointing to a deepening recession
across much of the world. [].
(Additional reporting by Wanfeng Zhou in New York; Editing by
Leslie Adler)
