* Dollar hit by Japanese exporter selling
* Nikkei falls 2.4 percent, risk aversion lifts yen
* Activity subdued due to year-end holidays
By Rika Otsuka
TOKYO, Dec 24 (Reuters) - The dollar slipped against the yen on Wednesday, pressured by selling from Japanese exporters a day after dismal U.S. growth and housing data suggested a prolonged recession ahead.
The euro rose versus the dollar after European Central Bank President Jean-Claude Trichet said on Tuesday that market participants have underestimated the importance of the steps the central bank has taken so far, cooling expectations for a euro zone interest rate cut in January.
Activity was light as many traders and investors in Asia had left for the holidays, while those who were still working concentrated on position-squaring, reluctant to take fresh positions.
"The dollar is staying above the 90 yen level just because those who had sold the U.S. currency before Christmas are buying it back," said Tsutomu Soma, senior manager of foreign assets at Okasan Securities. "The dollar's long-term outlook remains bearish as data continues to show how weak the U.S. economy is."
The dollar fell 0.7 percent from late U.S. trade to 90.30 yen, giving back gains made on Tuesday.
The U.S. currency rose versus the yen the previous day as investors locked in profits on the Japanese currency's sharp rally to a 13-year peak near 87 yen earlier this month.
Traders said Japanese exporters were dollar sellers as they expect the U.S. currency to resume its slide next year, wanting to repatriate their profits when it hovers above the psychologically important 90 yen.
U.S. data showed on Tuesday the world's biggest economy shrank 0.5 percent in the third quarter and existing home sales fell by a record amount last week as the recession picked up pace.
The euro rose 0.4 percent against the dollar to $1.3968. Against the yen, the single European currency was down 0.4 percent at 126.22 yen.
Expectations that the ECB will be more cautious about cutting rates -- now at 2.5 percent -- are likely to continue to support the euro, although another round of heavy euro buying is seen as less probable.
"The ECB's stance, which is more hawkish than expected, already lifted the euro last week and that alone would not spark another sharp rally in the single currency," said Minoru Shioiri, senior manager of FX trading at Mitsubishi UFJ Securities.
"I expect exchange rates to move little for the rest of the week," Shioiri said.
The yen climbed against the Australian and New Zealand dollars as a fall in Tokyo shares prompted Japanese investors to shun risk and trim overseas assets.
The Australian dollar dropped 1.1 percent to 61.28 yen, while the New Zealand dollar slid 0.5 percent to 51.28 yen.
The Nikkei average closed down 2.4 percent.
But yen buying was not as aggressive as percentage changes indicate, with thin volume exaggerating moves in the market.
Investors were looking towards a batch of U.S. data later in the day, including data on weekly jobless claims, November durable goods and November personal income and consumption.
Economists in a Reuters survey forecast 560,000 new filings for jobless benefits in the week ended Dec. 20, compared with 554,000 in the prior week. Consumption is likely to have fallen 0.7 percent, while durable goods orders probably dropped 3.0 percent versus a 6.9 percent decline in October, according to Reuters surveys.
Traders said the currency market reaction to the data is difficult to forecast as the market is currently driven by technical factors rather than economic fundamentals. (Additional reporting by Kaori Kaneko; Editing by Chris Gallagher)