Corrects in fourth paragraph to show that U.S. government
could take as much as a 40 percent stake, not "would" take.
* Yen falls broadly as risk appetite rises on Citi report
* Dollar hits 3-month high vs yen of 94.94 <JPY=>
* Euro cuts gains vs dollar after Trichet, Fitch comments
(Recasts, updates prices, adds comment, changes byline,
changes dateline, previous LONDON)
By Nick Olivari
NEW YORK, Feb 23 (Reuters) - The yen fell broadly on Monday
and neared a three-month low against the dollar amid rising
risk appetite on a report that the U.S. government could become
a large shareholder of ailing lender Citigroup, but stop short
of nationalization.
The report weighed on the yen in particular, though the
dollar was mostly lower against currencies as the Citi report
encouraged market players to buy back into assets perceived to
be higher risk.
The euro surrendered gains against the dollar after
European Central Bank president Jean-Claude Trichet said the
euro-zone financial system is under severe strain and Fitch
voiced concern about Austria's AAA rating. For details, see
[] and [].
U.S. stock futures rose after the Wall Street Journal said
the U.S. government could take as much as a 40 percent stake in
Citigroup by converting preferred stock into common stock
[].
The report helped to ease fears the U.S. government will
fully nationalize some big banks while they attempt to stave
off a deep recession.
The U.S. Treasury, Federal Reserve and banking regulators
said on Monday that the U.S. government stands firmly behind
the banking system. [].
The Citi report "has improved risk appetite and we've seen
the dollar extend some of the losses incurred last Friday,"
said Joe Manimbo, a currency trader at Ruesch International in
Washington. "In the absence of U.S. data today, that's setting
the tone for a weaker dollar."
In early New York trade, the dollar rose 1.6 percent to
94.63 yen <JPY=>, just below an earlier near three-month high
of 94.94 yen, according to Reuters data.
The euro rose 1.6 percent to 121.28 yen <EURJPY=> earlier
touching a one-month high of 121.91 yen.
The yen fell 1.1 percent against the Canadian dollar
<JPYCAD=R>, 0.9 percent against the Swiss franc <JPYCHF=R> and
2.7 percent against the pound <JPYGBP=R> , according to Reuters
data.
The Japanese currency was also pressured by concerns that a
deteriorating Japanese economic and political outlook are
hurting its perceived safe-haven status.
EURO/DOLLAR CUTS GAINS
The euro erased early gains against the dollar, last
trading down 0.2 percent at 1.2817 <EUR=> after earlier jumping
to a 12-day peak of $1.2991.
Analysts said Trichet's comments brought back into focus
the economic and banking woes in the euro zone, while the Fitch
comments highlighted the problems facing some of the countries
on the region's periphery.
"I was surprised how strong the euro was right at the start
of the European session on the Citigroup news. This is
potentially just based on reports so far," said Chris Turner,
head of forex strategy at ING in London.
Traders said investors were wary of more bad news emerging
about the euro-zone economy, with the closely watched Ifo index
on the German economic climate due on Tuesday.
Analysts also noted disappointment that the weekend's
meeting of European leaders, who were crafting a joint approach
to an April G20 meeting, failed to yield any concrete agreement
on ways to deal with the recession [].
"There was disappointment that the main focus of the G20
meeting was on financial market regulation, which is not the
most important problem at a time of global recession," said
Commerzbank head of FX research Ulrich Leuchtmann in
Frankfurt.
(Additional reporting by Jessica Mortimer in London; Editing
by Tom Hals)
