* Dollar hits 4-month high vs yen, clears 99 mark
* Yen sold broadly as long-yen unwinding continues
* U.S. private employers shed 697,00 jobs in February
* Stocks rise, euro rebounds from 3-month low vs dollar
* Plans for more Chinese spending increase risk appetite
(Recasts, updates prices, adds quotes, details)
By Steven C. Johnson
NEW YORK (Reuters) - The dollar vaulted to a
four-month high above 99 yen Wednesday as another slide in
U.S. private-employer rolls and worries about a flagging
Japanese economy pushed investors toward the U.S. currency.
The euro also hit a three-month trough below $1.25 but
rebounded with sterling as Wall Street rallied and traders took
profits ahead of more comprehensive U.S. jobs data and UK and
euro zone interest rate decisions this week.
"Improved equity markets have helped sentiment today and
people are taking some profits" after the dollar's recent rally
brought it near or beyond important psychological levels
against a number of major currencies, said David Watt, senior
currency strategist at RBC Capital Markets in Toronto.
That offset data showing U.S. private employers cut 697,000
jobs last month and a separate report showing the U.S. services
sector shrank again in February.
The global backdrop, though, hasn't changed, and "financial
markets are still a mess, credit markets are still tight and we
are still a long way from recovery," Watt said.
Midday in New York, the euro was trading at $1.2605,
up 0.3 percent on the day and well off a three-month low of
$1.2459 hit earlier. Sterling rose 0.6 percent to $1.4145
after dipping below $1.40.
Anxiety about the U.S. and world economies has supported
the dollar in recent months as investors cut exposure to stocks
and other currencies and sought safety in the greenback, which
benefits from its role as the world's reserve currency.
But optimism was boosted on Wednesday partly by China,
which said it would increase infrastructure and manufacturing
spending, raising hopes of stimulus for the global economy.
The dollar rose to 99.48 yen, closing in on 100 for the
first time since early November as investors worried about
Japan's economy. It was last up 1 percent at 99.33 yen.
Bank of Japan board member Miyako Suda said on Wednesday it
was hard to say whether the economy had hit bottom and voiced
concerns over tumbling share prices.
"The markets have a view that Asia is going to perform just
as badly maybe as Europe and the U.S. this year and there's a
view that dollar/Asia en masse should go higher," said Chris
Turner, head of FX research at ING in London.
Data also showed Australia's economy shrank in the fourth
quarter for the first time in eight years, though hopes of
increased Chinese spending helped the Australian dollar recover
to $0.6484, up 1.5 percent on the day.
Analysts said the focus now shifts to Thursday's policy
decisions, with the Bank of England and European Central Bank
both expected to cut borrowing costs by half a percentage point
to record lows.
The ECB in particular will be watched for any indication
that it is considering adopting unconventional measures beyond
simple rate cuts to boost the money supply and growth.
If that happens, look for renewed euro selling against the
dollar, said Michael Woolfolk, senior currency strategist at
The Bank of New York-Mellon.
"The market would take that to mean the ECB knows something
it doesn't, and that's not encouraging," he said.
(Additional reporting by Tamawa Desai in London; Editing by
James Dalgleish)
