Dollar tumbles versus yen on US auto turmoil

LONDON (AFP) - The dollar dived against the yen Monday on fresh worries about struggling US carmakers General Motors and Chrysler after a task force said their plans for recovery are "not viable."
The euro meanwhile slid against the dollar as investors anticipated that the European Central Bank (ECB) would reduce interest rates later this week. In London trade on Monday, the dollar dipped to 96.29 yen from 97.84 yen on Friday. The European single currency dropped to 1.3167 dollars from 1.3288 dollars late in New York on Friday.
President Barack Obama's auto task force said it had found recovery plans by the two automakers "not viable as currently structured," as Obama prepared to announce his new plan at 1500 GMT. "The market is responding to the US news," Nomura Securities senior currency dealer Hiroshi Maeba told Dow Jones Newswires.
"This is exacerbating already weak sentiment," another broker said. The companies have already received 17.4 billion dollars in emergency loans approved in December to help them stay afloat.
The euro was weaker on speculation that the ECB will slash eurozone interest rates on Thursday by as much as 50 basis points to 1.0 percent, the lowest in the bank's 10-year history, dealers said.
The prospect of interest rate cuts weighs on currencies because it makes them less attractive for currency investors in terms of yield.
Markets will also closely watch whether monetary authorities will announce quantitative easing - measures to boost money supply - following in the footsteps of Britain and the United States.
Meanwhile currency players were also eyeing Thursday's G20 summit, as well as economic data from the United States including a key monthly employment report due out later in the week.
But investors appeared to have few expectations that the G20 meeting in London, gathering key industrialised and developing economies, will announce concerted fiscal action amid reports of rifts among members, dealers said.
"It appears hopes for an announcement of another global fiscal boost are likely to be dashed," wrote NAB Capital strategist John Kyriakopoulos in a note to clients.
The G20 summit will bring together leaders from major developed and emerging economies including the United States, Japan, China, rich European nations, Mexico, South Korea and Saudi Arabia.
Elsewhere, dealers absorbed gloomy data which showed Japan's industrial output plunged 9.4 percent in February from the previous month as companies slashed production to cope with the recession.
Production had fallen a record 10.2 percent in January from a month earlier as Japanese manufacturers have slashed jobs and idled plants to deflate bloated inventories, the trade and industry ministry said.
In London trade on Monday, the euro was changing hands at 1.3167 dollars against 1.3288 dollars late on Friday, 127.13 yen (130.02), 0.9318 pounds (0.9274) and 1.5154 Swiss francs (1.5204).
The dollar stood at 96.29 yen (97.84) and 1.1478 Swiss francs (1.1433).
The pound was at 1.4173 dollars (1.4323).
On the London Bullion Market, the price of gold fell to 922.70 dollars an ounce from 924 dollars an ounce late on Friday.