(Refiles with no changes to headline, text)
* US dollar comes off nearly 3-month high vs euro
* Merkel declines to speculate on helping neighbors
* Yen pressured due to worries about Japan's economy
* BOJ keeps interest rates unchanged at 0.10 pct
(Adds comments, updates prices)
By Wanfeng Zhou
NEW YORK, Feb 19 (Reuters) - The U.S. dollar fell against
the euro on Thursday amid relatively steady world stock markets
and hopes that Germany may help some of the weaker economies in
Europe lifted investor appetite for risk.
The euro's rise was also underpinned by gains in Eastern
European currencies. Analysts said the euro zone currency
looked attractive since it neared a three-month low this week,
but held above the psychologically important $1.25 level.
The yen saw heavy pressure again, falling to a six-week low
against the dollar after the Bank of Japan extended buys of
commercial paper in an effort to support the world's second
largest economy, mired in its deepest slump in more than three
decades.
"There's a lot of bargain hunting going on, plus a little
bit better risk appetite across the board following
(Wednesday's) announcement by the Obama administration" of a
plan to help stem U.S. home foreclosures, said Boris
Schlossberg, director of currency research at GFT Forex in New
York.
In midday trading, the euro climbed 1.2 percent to $1.2686
<EUR=>, recovering from a three-month low of $1.2511 touched
the previous day, according to Reuters data.
Strength in the euro was also driven by growing optimism
that Germany may help organize support for hard-hit Eastern
European economies, analysts said.
German Finance Minister Peer Steinbrueck indicated this
week that euro zone countries may be forced to help a fellow
member state if it encountered serious financial problems.
But at a press conference on Thursday, German Chancellor
Angela Merkel declined to speculate on how Germany might help
another euro zone member if it was in trouble. The euro trimmed
gains after the comments. For more, see []
The dollar was last up 0.4 percent at 94.21 yen <JPY=>
after the Bank of Japan left its key policy rate unchanged at
0.10 percent on Thursday, as expected. The Japanese currency
had earlier risen to 94.42 yen, its highest level since Jan.
6.
The yen also fell sharply against most major currencies,
including the euro, sterling and the Australian and New Zealand
dollars. The euro last traded up 1.7 percent at 119.63 yen
<EURJPY=>.
"The global downturn, a strong yen and the inability of
corporations to generate funding has sent the economy into its
worst downturn in 35 years," said John Rivera, currency analyst
at DailyFX.com.
"The yen has continues to weaken as the currency has
started to lose its safe-haven status due to concerns over the
Japanese economy," he added.
The euro came under heavy pressure this week after two
credit ratings agencies warned of a severe recession in
emerging Europe, stoking concerns about the exposure of euro
zone banks to the region.
But a bounce in Central and Eastern European currencies on
Thursday, which clawed back some of this week's steep losses,
was cited as a positive for the euro.
Analysts said the euro's rebound should be seen more as
profit-taking than a change in sentiment as worries about the
outlook for the global economy and about severe problems in the
European banking sector have far from gone away.
"The outlook for the euro remains extremely challenging,
perhaps people are just taking profits on some of the moves
we've seen in East Europe, but nothing's really changed and the
euro zone remains vulnerable because of its massive lending to
that region," said RBS strategist Paul Robson.
(Editing by Gary Crosse)
