The dollar edged up from 14-year lows against the yen on Thursday as renewed risk aversion prompted investors to shed riskier assets, giving pause to broad dollar selling.

A two percent fall in European stocks .FTEU3 and a one percent drop in U.S. share futures encouraged traders to trim positions that involved selling dollars for other currencies and assets like commodities.

Market players also refrained from re-testing lows on the dollar as trade thinned for the U.S. Thanksgiving Day holiday.

But dollar-bearish sentiment remained intact on views U.S. interest rates would stay low for some time and on pressure for the dollar to weaken to correct the U.S.' imbalances.

By 1242 GMT the dollar index, a barometer of its performance against six major currencies, rose 0.5 percent on the day at 74.629, up from a 15-month low of 74.170 earlier in the day.

Dubai's shock move on Wednesday to restructure its biggest corporate debtor, Dubai World, and delay repayment on some of the company's $59 billion of liabilities, dented risk appetite across asset markets on Thursday, to the dollar's benefit.

While much of the moves are going to occur in rates and credit markets, it is also being reflected in stock markets and foreign exchange, said Lauren Rosborough, senior strategist at Westpac in London.

The euro EUR= was down a third of percent on the day at $1.5080, after rising more than 1 percent on Wednesday to a 15-month high of $1.5145 on EBS.

But many expected the dollar to resume its decline.

It's a sort of 'dead cat bounce' in a sense, said Roberto Mialich, strategist at Unicredit in Milan. We had a sharp drop yesterday and people are taking profits. But the euro remains above the previous high of $1.5060.


The dollar also fell to its lowest level against the Swiss franc since April 2008, but the Swiss currency's rise was abruptly halted as the Swiss central bank was seen selling its currency, traders said.

The dollar rose back above 1.0000 francs CHF=, having earlier tumbled to just above 0.9900 francs on EBS.

Some market participants said the SNB bought up to $1 billion in early Europe hours. The SNB did not comment. More dollar/Swiss franc selling was seen later in the day.

As well as the retest of the perceived intervention level of 1.50 franc in euro/Swiss franc, we would note Swiss franc's overnight rally took the trade-weighted index back through the level at which the SNB first intervened in March, said Adam Cole, global head of FX strategy at RBC Capital Markets.

That is perhaps another reason to think the central back will act aggressively to prevent further strength.

In contrast, Japanese authorities refrained from acting on the yen's rise, saying it was watching the market cautiously.

The dollar shot through a previous low of 87.10 yen to fall to 86.29 yen on trading platform EBS, its weakest level since 1995. Traders said 85 yen was now in the market's sights.

But analysts said the yen's appreciation was more a result of a falling dollar and Japan would need cooperation from the United States and Europe if it wanted to buy dollars.

Unless the United States takes the stance that a one-sided fall in the dollar is unfavourable, the dollar's fall will likely continue, said Mitsuru Sahara, chief manager of currency derivatives trading at Bank of Tokyo-Mitsubishi UFJ.

The possibility of Japan intervening depends on the pace of the dollar's fall versus the yen and its impact on other markets such as Japanese stocks and bonds.

Japan has not intervened in currency markets since March 2004.