* Gains in oil, U.S. stocks drive dollar, yen lower
* China rules out "sudden" changes in FX reserve policy
* Currencies trading within ranges ahead of U.S. jobs
(Recasts, adds comments, updates prices, changes byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, June 29 (Reuters) - The dollar fell against the
euro on Monday and the yen weakened as a rise in oil prices and
U.S. stocks reduced safe-haven demand for both currencies.
Comments from China, the single biggest holder of U.S
Treasuries, ruling out sudden changes in its foreign exchange
reserve policy bolstered the dollar versus the yen earlier in
the day. But currency traders switched their focus to the surge
in crude oil prices and a rise in equities as the session
progressed.
"Commodities are really the big story of the day. We've had
the Nigerian oil field attack, which has seen oil spike and
that's really driven up the stock market," said Dan Cook,
market analyst at IG Markets in Chicago.
"With stocks up, investors are selling the dollar against
the euro especially. The yen is also down sharply with equities
trading higher."
Oil prices <CLc1> rose nearly 4 percent on Monday, lifted
by word of fresh rebel attacks on oil installations in Nigeria
and gains in equity markets.
Nigeria's main militant group said its fighters had attacked
an oil facility belonging to Royal Dutch Shell <RDSa.L> in the
Niger Delta on Monday, days after President Umaru Yar'Adua
proposed an amnesty. [].
In early afternoon trading, the euro rose 0.3 percent
against the dollar to $1.4088 <EUR=>. The dollar was up 0.8
percent versus the yen at 96.02 <JPY=EBS>.
The euro was also up versus the yen, gaining 1 percent to
135.29 <EURJPY=EBS>.
The China news earlier also was a positive factor for the
dollar. Chinese officials said at a meeting of central bankers
in Basel at the weekend that the policy governing its currency
reserves, which comprise mainly U.S. Treasuries, was stable and
consistent with no "sudden changes," giving the dollar some
respite. For details, see []
Some analysts though were not buying China's comments.
"I don't really believe in what China said (earlier). I
don't think their politics is in line with their best
interests," said Melvin Harris, currency strategist at Advanced
Currency Markets in New York.
"China has way too much dollar debt. They're going to have
to diversify in order to manage risk successfully."
The dollar had come under pressure recently as debate
intensified about the use of an alternative global currency to
the greenback, with China's central bank renewing its call for
a super-sovereign reserve currency last week.
Overall, analysts said currency movements would remain
subdued ahead of U.S. payrolls data for June and comments by
the European Central Bank and Sweden's Riksbank expected later
this week after their monetary policy meetings.
(Additional reporting by Vivianne Rodrigues)
(Editing by Theodore d'Afflisio)
