WORLD FOREX: Dlr

WORLD FOREX: Dlr, Euro Dn Vs Yen On Weak Chinese Stock

OKYO (Dow Jones)--The dollar and euro fell against the yen in Asia Tuesday as weak Chinese stock prices stifled players' risk appetite and prompted them to buy the safe-haven Japanese unit.

The two currencies may fall further if European and U.S. stock prices fall later in the global day, but their fall is likely to be limited ahead of a two-day Federal Open Market Committee meeting.

The Shanghai Composite Index, the main Chinese benchmark on shares, fell 0.8% to 3258.40 during the Tuesday session, while Japan's benchmark Nikkei 225 Stock Average ended the morning session up 0.2% at 10,544.93. But currency players took the Shanghai Composite Index's fall more seriously than the Nikkei's rise, selling risk-sensitive units such as the euro.

"I think the Chinese economy is more important than the Japanese economy as a leading force in the recession-hit global economy," said Shinichi Hayashi, a senior dealer at Shinkin Central Bank. "Asian investors, for this reason, are recently paying more attention to Chinese share markets than they do to Japan's."

The greenback fell to Y96.65 from Y97.11 in New York Monday, and is expected to decline further if European and the U.S. shares also show poor performance later in the day, Hayashi said. The euro also declined to Y136.61 from Y137.32.

The Dollar Index - which measures the value of the U.S. currency against six major units - fell to 79.15, compared with 79.24 late Monday in New York.

But their downside against the yen will likely be limited for now as players are unwilling to make aggressive bets ahead of the release of the statement from the FOMC Wednesday.

A Dow Jones poll of economists forecasts the committee will leave its rates unchanged, but players are divided on the tone of the statement.

"Some players say it will be hawkish, but I'm skeptical about that view because I think the U.S. economy isn't that strong yet," said Hiroshi Maeba, a senior dealer at Nomura Securities. "It's hard to make moves ahead of the statement's release."

Elsewhere, Bank of Japan Gov. Masaaki Shirakawa will meet the press later in the day to lay out the bank's latest view on the Japanese economy. But the market's reaction may be limited because surprise comments are unlikely, dealers said.

Earlier in the day, the BOJ left its rates unchanged at 0.10%.

The euro, meanwhile, was at $1.4134 from $1.4142 in New York. Dealers said it will remain in a tight $1.4100-$1.4200 range for now because not many players are present due to summer vacation and the market lacks fresh trading cues.

Interbank Foreign Exchange Rates At 00:50 EDT / 0450 GMT                           Latest     Previous   %Chg   Daily   Daily    %Chg  Dollar Rates                        2150 GMT          High    Low      12/31  USD/JPY Yen              96.66-69   97.14-19   -0.49  97.14   96.56    +6.69  EUR/USD Euro             1.4136-38  1.4135-41  +0.01  1.4158  1.4124   +1.13  GBP/USD Sterling         1.6480-84  1.6461-66  +0.12  1.6527  1.6449  +12.68  USD/CHF Swiss Franc      1.0855-58  1.0854-59  +0.01  1.0864  1.0840   +1.74  USD/CAD Canadian Dlr     1.0908-12  1.0881-86  +0.25  1.0908  1.0868  -10.33  AUD/USD Australian Dlr   0.8338-42  0.8376-81  -0.45  0.8381  0.8322  +17.88  NZD/USD New Zealand Dlr  0.6735-41  0.6764-69  -0.43  0.6769  0.6732  +15.42  EUR/JPY Yen              136.66-69  137.35-39  -0.50  137.40  136.46   +7.91   

-By Takashi Mochizuki, Dow Jones Newswires; 813-6895-7554; takashi.mochizuki@dowjones.com