* Yen rises broadly, hits 7-week high vs dollar
* Risk aversion continues on uncertainty about economy
* US private sector sheds 298,000 jobs in August
(Adds comment, details, updates prices)
By Wanfeng Zhou
NEW YORK, Sept 2 (Reuters) - The yen rose broadly on
Wednesday, hitting a seven-week high versus the dollar, as a
worse-than-expected U.S. private-sector jobs report boosted the
appeal of the Japanese currency as a safe haven.
The yen also jumped to seven-week highs versus the euro and
sterling as the data, which came two days ahead of the
government's August unemployment report, added to uncertainty
about the U.S. labor market and continued risk aversion.
"The outlook for non-farm payrolls is not clear. There's
hesitancy in the currency market and it's being reflected in
equities as well," said Kathy Lien, director of currency
research at GFT Forex in New York.
Private employers cut 298,000 jobs in August, according to
the ADP Employer Services report, jointly developed with
Macroeconomic Advisers LLC. Economists had expected job losses
of 250,000, although the number was fewer than a revised
360,000 jobs lost in July. <For related news click
[]>.
In midday New York trading, the dollar <JPY=> fell 0.5
percent to 92.41 yen after hitting a low of 92.23 yen,
according to Reuters data, its lowest since mid-July.
The euro was last down 0.3 percent at 131.62 yen
<EURJPY=R>, while sterling was down 0.1 percent at 149.90 yen
<GBPJPY=>
U.S. stocks mostly hovered around breakeven during the
morning session, with the S&P 500 index <.SPX> up 0.8 percent
at midday. The currency market has been taking cues from equity
prices in recent days.
"There's a very strong correlation between any move in the
currency market and the equity market," said Fabian Eliasson,
vice president of currency sales at Mizuho Corporate Bank in
New York.
"It seems that in the last couple of days, despite good
economic data coming out of the U.S., the stock market has sort
of disappointed and hasn't really moved in any positive way. So
currencies are clearly reacting to that."
ECB, PAYROLLS
Against the dollar, the euro recouped earlier losses and
last traded up 0.2 percent at $1.4246 <EUR=> as U.S. stocks
came off earlier lows. It touched $1.4175 on Tuesday, the
lowest level since Aug. 19.
The European Central Bank is widely expected to keep
interest rates at 1.0 percent on Thursday, with ECB President
Jean-Claude Trichet likely to caution against growing talk of a
full-blown euro zone economic recovery.
On Friday, the U.S. government will release the non-farm
payrolls report for August, which includes public and private
sector jobs. Economists polled by Reuters expect job losses of
225,000 for August. <ECON>
Some traders said yen gains were being driven by short-term
speculators building long yen positions ahead of the Labor
Department report. A weak reading may drive the dollar/yen down
to the 90 yen mark, they said.
"The trend is improving, but the bottom line, though, is
that the U.S. economy is still bleeding jobs, and as result
we're seeing selling in risk trades in the currency market,"
said Win Thin, senior currency strategist at Brown Brothers
Harriman in New York.
In other trading, the Australian dollar <AUD=> rose 0.7
percent to $0.8321 after data showed Australia's economy grew
at its fastest pace in more than a year last quarter,
supporting the case for an early rise in interest rates.
[].
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by
Kenneth Barry)
