* Waning Dubai concerns, RBA hike stoke risk appetite
* Yen falls after BOJ announces new funding operations
* SNB affirms stance to stem Swiss franc rise vs euro
(Recasts, adds comment, updates prices, changes byline,
dateline, previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, Dec 1 (Reuters) - The dollar fell on Tuesday as
waning worries about Dubai's debt, Australia's interest rate
hike, and upbeat euro zone data dimmed the greenback's
safe-haven appeal, sending investors elsewhere for better
returns.
The yen also weakened broadly after the Bank of Japan
announced more monetary policy easing measures to fight
deflation and help the ailing economy, while holding interest
rates at 0.1 percent.
But the Dubai story and its impact on risk sentiment
remained the focus of the market.
News overnight that government-owned Dubai World will
restructure about $26 billion of its estimated $59 billion has
calmed the market's fears about another credit meltdown.
In addition, the Reserve Bank of Australia's move to raise
interest rates for a third straight month to 3.75 percent fed
the market's appetite for risk, along with data showing
better-than-expected European manufacturing data and strong
German retail sales. For more details, see []
That sent stocks higher and boosted the euro and
higher-yielding currencies such as the Australian dollar.
European share prices rallied 2 percent <>.
"The Dubai story has sort of washed its way through the
market and it seems that the whole thing is a relatively
contained issue," said Boris Schlossberg, director of FX
research at GFT in New York.
"We also had a rate hike in Australia which is bullish for
risk and we've got very good data from the euro zone. So as
economic data continue to surprise to the upside, the recovery
bulls have the upper hand and this is good for risk appetite
and bad for the dollar."
In early New York trading, the euro rose 0.6 percent to
$1.5094 <EUR=> while the ICE Futures dollar index fell 0.6
percent to 74.426 <.DXY>.
The Australian dollar, meanwhile, rose nearly 0.8 percent
on the day to US$0.9220 <AUD=>.
Against the yen, the dollar was up 0.6 percent at 86.83
yen<JPY=>. The dollar in recent sessions had suffered against
the yen, hitting 84.82 yen late last week for the first time
since mid-1995, as dollar interbank borrowing costs have fallen
below those for yen this year.
On Tuesday, the dollar's fortunes against the yen turned
after the BOJ said it will provide 10 trillion yen in
three-month funds at a fixed rate of 0.1 percent in a bid to
enhance monetary easing by trying to bring down longer-term
rates.
Political pressure on the BOJ to avert recession has grown,
but Tuesday's decision is seen as a way to avoid a return to a
narrow form of quantitative easing, under which the BOJ slashed
rates to zero and flooded markets with cash in 2001-2006.
The euro rose 1.1 percent to 131.05 yen <EURJPY=>.
"The moves by the BoJ caused a big shakeout of long yen
positions, and a weaker yen has helped asset price movements
elsewhere ... as the weak yen to a degree -- but maybe not as
much as dollar -- drives the risk trade," said Stephen Gallo,
head of FX analysis at Schneider FX in London.
Meanwhile, the Swiss National Bank reiterated on Tuesday
its stance of stemming the franc's rise versus the euro.
[]. As a result, traders were hesitant to test the
SNB's resolve to keep the franc down. Early in New York, the
euro was little changed versus the Swiss currency at 1.5092
<EURCHF=>.
(Editing by Chizu Nomiyama)
((gertrude.chavez@thomsonreuters.com; +1 646 223 6322;
Reuters Messaging: gertrude.chavez.reuters.com@reuters.net))
