* Uncertainty over proposed US bailout plan hits dollar
* Dollar slips vs yen on Japanese exporter selling
* Trading volume light as investors shun risk
By Rika Otsuka
TOKYO, Sept 25 (Reuters) - The dollar slid against the euro
and the yen on Thursday, hurt by lingering uncertainty over the
U.S. government's proposed $700 billion bank bailout plan and
worries about the impact of the credit crunch on the economy.
In an attempt to persuade Americans to support the Wall
Street rescue package, President George W. Bush warned on
Wednesday that the United States was in the middle of a serious
financial crisis that could push the economy into recession.
[]
Bush will meet Republican and Democratic leaders of the U.S.
Congress at 1955 GMT on Thursday to hammer out details of a
rescue plan, the White House said.
Bush's comments came after Federal Reserve Chairman Ben
Bernanke on Wednesday said "extraordinary stress" in financial
markets was threatening an already weak U.S. economy, urging
lawmakers to support the bailout package.
"The sense of panic in the market is receding thanks to steps
by the U.S. government, as well as private enterprises," said
Tsutomu Soma, senior manager of foreign assets at Okasan
Securities.
"But investors remain reluctant to buy the dollar as they are
concerned about the U.S. economy," Soma said.
The euro rose 0.6 percent from late U.S. trade to $1.4698
<EUR=>, well above the day's low of $1.4603 hit on trading
platform EBS in early Asian trade.
The dollar index <.DXY>, which tracks the U.S. currency's
performance against six major currencies, was down 0.5 percent at
76.590.
The dollar climbed the previous day, with investor confidence
in the U.S. currency reviving a little after reports that
billionaire Warren Buffett would invest $5 billion in Goldman
Sachs Group Inc <GS.N> and that the Federal Reserve had set up
currency swap lines with more central banks.
But that was offset by fears that congressional wrangling
could delay the financial rescue plan or lead to it being watered
down.
The market's main points of concern are comments from top
U.S. officials, the details of the bailout package, and how soon
Congress will pass it, said Mitsuru Sahara, senior manager of
foreign exchange sales for Bank of Tokyo-Mitsubishi UFJ.
"We may have to wait until the next release of the U.S.
monthly employment data in early October before seeing the market
reacting to economic data again," Sahara said.
The dollar dipped 0.4 percent against the yen to 105.79 yen
<JPY=> despite Japanese data showing the country's trade balance
swung into a deficit in August for the first time since January
as exports slowed and import costs rose.
The trade data added to worries over the world's
second-largest economy amid fears of recession and the effect of
financial market upheaval. []
Bank of Japan policy board member Tadao Noda said on Thursday
that the Japanese economy was unlikely to fall into a deep
downturn as the country is more resilient to downside risks to
the economy than in previous downturns.
Speaking to business leaders in northern Japan, Noda also
said the Japanese financial system and markets remained stable
compared with Europe and the United States. []
But his comments had little impact on currencies.
Traders said Japanese exporters selling before the quarter
ends later this month sent the dollar lower against the yen.
Other market players, however, retreated to the sidelines,
shunning risk due to market turmoil in the past few weeks as the
U.S. financial crisis deepened.
Trouble in the U.S. financial sector went from bad to worse
this month, highlighted by last week's collapse of Lehman
Brothers <LEHMQ.PK> and the $85 billion rescue of American
International Group Inc <AIG.N>.
"Trading volume has thinned in the past one to two weeks to
the lowest levels in the decade," Bank of Tokyo-Mitsubishi's
Sahara said.
The euro was up 0.2 percent to 155.50 yen <EURJPY=>.
(Additional reporting by Shinichi Saoshiro; Editing by Hugh
Lawson)
