* Euro, sterling fall sharply on Fortis, B&B bailouts
* U.S. lawmakers set to vote on $700 bln bailout fund
* Dollar gains limited as credit worries persist
* Market wary of U.S. data, including jobs due Friday
By Chikako Mogi
TOKYO, Sept 29 (Reuters) - The euro and sterling retreated
on Monday on growing concerns about the financial system as the
toll from the credit crisis spreads to Europe.
The dollar received a boost from relief that U.S. lawmakers
were set to vote on a $700 billion bailout fund to alleviate the
credit woes. []
The euro fell against the dollar as Belgian-Dutch financial
group Fortis <FOR.BR> was rescued in a state buyout after
European Central Bank President Jean-Claude Trichet held
emergency talks with Dutch, Belgian and Luxembourg officials.
[]
Sterling was hit as authorities prepared to nationalise
troubled mortgage lender Bradford & Bingley <BB.L> and were
discussing the sale of its savings deposits and branches, people
familiar with the matter said. []
"The news of the troubled banks highlighted that Europe has
got the same disease as the United States," said Masaki Fukui,
senior market economist at Mizuho Corporate Bank.
"European currencies including the euro are likely to be
pressured," Fukui said.
The euro fell 1.1 percent against the dollar to $1.4457
<EUR=> while sterling shed 1.1 percent against the dollar to
$1.8246 <GBP=D4>. The dollar rose 0.4 percent against the yen to
106.35 yen <JPY=>.
A senior dealer at a Japanese trading firm said the euro was
likely to be susceptible to more news of troubled European
financial institutions.
"The market has been too preoccupied with the credit crisis
in the U.S., and the financial woes taking a toll on European
institutions come as fresher news for the market," he said. "The
dollar will likely hold up well against the euro for now."
U.S. lawmakers geared up for a possible vote on Monday on
creating the $700 billion government fund.
Congressional leaders from both parties said they had
reached a tentative agreement early on Sunday, but questions
abound as to whether the rescue plan, which would use taxpayer
funds to buy up toxic mortgage debt, would restore confidence to
shaky markets and head off a deeper downturn.
"After failure to agree as initially expected last week, the
prospect for a vote on the fund does pave the way for the
dollar's recovery in the near term," said Hideki Amikura, deputy
general manager of the forex section at Nomura Trust and
Banking.
"But there will be no dramatic comeback for the dollar given
many uncertainties over the fund's details, and with the market
still expecting more bad news on the financial system," he said.
Wachovia Corp is in talks with rivals to be taken over,
sources familiar with the situation said, after the U.S. bank's
shares tumbled 27 percent on Friday due to fears about its hefty
mortgage portfolio. []
Amikura said market players were also wary of economic data
including monthly U.S. payrolls due on Friday, with weak figures
likely to put a cap on the dollar.
"The market's next focus is Friday's jobs data and upcoming
data on the housing market and consumption to gauge the state of
the U.S. economy," he said.
(Additional reporting by Rika Otsuka; Editing by Michael
Watson)
