* Lingering uncertainty over US rescue plan weighs on dollar
* Berkshire Hathaway to invest $5 billion in Goldman Sachs
* Berkshire investment news supports dollar
* German Ifo, US housing data eyed for impetus
By Shinichi Saoshiro
TOKYO, Sept 24 (Reuters) - The dollar edged down against the
euro on Wednesday on uncertainty about the effectiveness of the
U.S. government's proposed $700 billion bailout plan to tackle
the financial crisis.
But the U.S. currency erased earlier losses and gained
against the yen after news of Warren Buffett's Berkshire
Hathaway Inc investing $5 billion in Goldman Sachs Group Inc
<GS.N> sent U.S. equity futures shooting up in Asian trade.
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"At the end of the day the dollar still remains in range.
The main focus is on whether the U.S. Congress will approve the
rescue plan within the week, and whether the plan functions as
hoped if passed," said Tomoko Fujii, head of economics and
strategy for Japan at Bank of America.
The greenback, amid volatile swings, has retreated against
the euro in the past week or so since trouble in the U.S
financial sector progressed from bad to worse, highlighted by
last week's collapse of Lehman Brothers <LEHMQ.PK> and the $85
billion rescue of American International Group Inc <AIG.N>.
The financial crisis, stemming from the subprime debacle,
has been dubbed America's worst since the Great Depression with
still-standing Wall Street investment banks Morgan Stanley and
Goldman Sachs receiving approval this week to become commercial
banks.
The U.S. government's proposed rescue plan has failed to
stem the dollar's slide, as uncertainty due to the plan's lack
of details has fanned doubts about its effectiveness.
The euro advanced 0.1 percent to $1.4658 <EUR=> after a low
of $1.4636. The dollar rose 0.3 percent to 105.90 yen <JPY=>,
after dropping to around 105.35 yen earlier in the day.
The Goldman news sent S&P futures <SPc1> jumping as much as
23 points, and dragged the yen lower, stemming some of the
inflow that the Japanese currency had enjoyed the previous day
when U.S. stocks slumped on fear that congressional wrangling
could delay the plan to rescue the financial sector.
Asian equity markets were jittery but erased much of their
earlier losses, giving a boost to the dollar against the yen in
the late afternoon trade.
The Nikkei stock average <> ended up 0.2 percent,
recovering from an earlier 1.5 percent drop.
"As it will take more time for the bailout plan to be
enacted, the chances for the dollar and U.S. stocks to fall will
increase," said a sales trader at a Japanese trust bank in a
note to clients.
FOGGY DOLLAR OUTLOOK
Market watchers said longer-term prospects for the dollar
remain foggy as questions linger over the U.S. bailout plan,
limiting confidence over its positive impact on the financial
sector.
Eyes are on August U.S. existing home sales figures slated
for release on Wednesday, with analysts warning that the dollar
could feel the heat if the numbers are discouraging.
"Expectations are for a decline in existing home sales. The
widely held view is that the U.S. economy will not be able to
gain a toehold towards recovery until the housing market slump
comes to an end," said Fujii at Bank of America.
Market players will also be watching German September Ifo
business confidence data to be released on Wednesday for further
hints of economic weakness in the euro zone after factory data
released the previous day showed euro-zone manufacturing
activity contracted at its fastest rate in nearly seven years.
The euro gained 0.4 percent to 155.29 yen <EURJPY=R>.
(Additional reporting by Satomi Noguchi; Editing by Chris
Gallagher)
