* Euro inches down vs dollar, yen as risk appetite ebbs
* Focus on fate of U.S. automakers
* Australian dollar falls after downbeat data
By Kaori Kaneko
TOKYO, Dec 9 (Reuters) - The dollar rose against the euro on Tuesday, reversing some of the sharp losses made the previous day, as investor risk appetite ebbed slightly on subdued equity market gains.
The euro had risen to its highest level against the dollar since late November on Monday when rallying global stocks markets, including Tokyo shares, boosted investor willingness to buy riskier assets.
But market players were cautious on the outlook for equities and risk appetite, citing fears that the weakness in the global economy could be prolonged.
"There is persistent doubt about the sustainability of the gains in stocks. It is difficult for currency market players to simply react to the move in stocks," said Nobuaki Kubo, vice president at BBH Investment Services.
Tokyo's Nikkei share average rose 0.8 percent but some market participants said they had expected a stronger advance after the S&P 500 rose 3.8 percent.
The MSCI index of Asia-Pacific stocks outside Japan climbed 0.1 percent on Tuesday after spiking 7 percent the previous day.
The euro fell 0.5 percent from late U.S. trading on Monday to $1.2867. Against the yen, the euro slipped 0.9 percent to to 119.05 yen.
Like the dollar, the Japanese currency has served as a safe haven whenever investors have turned risk averse on a plunge equities.
The dollar retreated 0.4 percent to 92.47 yen.
"The currency market is still mulling which way to move and investors are unable to take risks," Kubo at BBH Investment Services said.
U.S. stocks rallied to their highest level in a month on Monday on hopes that U.S. President-elect Barack Obama's plan for massive infrastructure spending could limit the pain of recession and on hopes for a bailout for troubled U.S. automakers.
The White House reviewed a Democratic plan to bail out car makers with up to $15 billion in loans, in a move that could also clear the way for longer-term help if the industry meets certain conditions.
Traders said even if the bailout was approved, it may not lead to added risk appetite as it remains to be seen whether the rescue would provide a long term solution for the auto makers.
"The rescue plan being discussed is not strong enough to solve the fundamental problem of the industry, " said Yousuke Hosokawa, treasury department senior manager at Chuo Mitsui Trust and Banking Company.
"Although the government is trying to do its best to prevent the worst situation, more government spending always carries concerns about its fiscal situation," he said.
The Australian dollar slipped lower on Tuesday after data showed that sales and employment at Australian businesses slumped in November to their lowest since 1992.
It fell 1.8 percent to $0.6555 after marking a 3-½ week high of $0.6991 on Monday.
The Aussie declined 2.2 percent to 60.62 yen.
The New Zealand dollar dropped 1.5 percent to $0.5397. (Additional reporting by Shinichi Saoshiro; Editing by Edwina Gibbs)