* Obama determines GM bankruptcy best option -report
* Dlr, yen surge stopped as US says report inaccurate
* Dent in risk appetite sends Aussie, kiwi lower
By Satomi Noguchi
TOKYO, April 1 (Reuters) - The dollar and the yen rose on Wednesday on a report that the White House was prepared to let U.S. automakers go bankrupt, but retreated from the day's highs after a U.S. administration official said it was inaccurate.
Bloomberg reported that U.S. President Barack Obama has determined that a prepackaged bankruptcy is the best way for General Motors Corp, quoting people familiar with the matter.
But the yen and dollar came off the day's highs after a senior U.S. administration official said President Barack Obama's thinking on the crisis facing GM has not changed since Monday, saying the report was "not accurate."
"The report about Chrysler's possible bankruptcy is now impacting the whole market," said a senior trader at a Japanese bank.
"U.S. stock futures are looking terrible after a positive close in New York, prompting market players to dump currencies they had bought against the yen," the trader said.
U.S. stock futures were 1 percent lower, and fell as much as 1.9 percent at one stage.
The dollar index, a gauge of the greenback's performance against six major currencies, rose 0.4 percent to 85.850, but was off an earlier high of 85.940.
The euro was down 0.4 percent from late New York trade the previous day to $1.3193 and shed 0.7 percent to 130.29 yen.
The dollar fell 0.1 percent to 98.85 yen.
The greenback had earlier risen to 99.48 yen, the highest since March 5, after the Bank of Japan's tankan survey showed confidence among Japan's big manufacturers tumbled at its fastest pace ever in the first quarter to the worst on record.
The survey highlighted the pain companies are facing as the global economic crisis scythes through Japan's exports.
Reduced investor risk appetite sent higher-yielding currencies such as the Australian dollar lower, which was also dented by data showing Australian retail sales fell by the most in nine years, adding to the case for a cut in interest rates next week.
But influential central bank watcher and columnist Terry McCrann argued that the Reserve Bank of Australia would stand pat. McCrann gave no source for his belief but has been correct on enough RBA decisions to command market attention.
Patrick Bennett, a currency analyst at Societe Generale said in a client note that he is looking look for a 50 basis point cut, citing the central bank's lower growth outlook and domestic data that has been mixed but is on balance weak.
After slashing rates by 400 basis points since September the RBA left rates unchanged at 3.25 percent in March.
The New Zealand dollar extended a big slide after New Zealand's central bank warned on Wednesday that a recent rise in market interest rates was unwarranted and out of sync with its view of the economy.
The Aussie fell 0.5 percent to $0.6878 and dropped to 0.6 percent to 67.93 yen.
The kiwi slid 0.8 percent to ery or comment on this story, send an email to news.feedback.asia@thomsonreuters.com))