* Waning Dubai concerns, RBA hike stoke risk appetite
* Yen falls after BOJ announces new funding operations
* SNB affirms stance to stem Swiss franc rise vs euro
(Recasts, adds comment, updates prices, changes byline, dateline, previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, Dec 1 (Reuters) - The dollar fell on Tuesday as waning worries about Dubai's debt, Australia's interest rate hike, and upbeat euro zone data dimmed the greenback's safe-haven appeal, sending investors elsewhere for better returns.
The yen also weakened broadly after the Bank of Japan announced more monetary policy easing measures to fight deflation and help the ailing economy, while holding interest rates at 0.1 percent.
But the Dubai story and its impact on risk sentiment remained the focus of the market.
News overnight that government-owned Dubai World will restructure about $26 billion of its estimated $59 billion has calmed the market's fears about another credit meltdown.
In addition, the Reserve Bank of Australia's move to raise interest rates for a third straight month to 3.75 percent fed the market's appetite for risk, along with data showing better-than-expected European manufacturing data and strong German retail sales. For more details, see [ID:nGEE5B00BY]
That sent stocks higher and boosted the euro and higher-yielding currencies such as the Australian dollar. European share prices rallied 2 percent <.FTEU3>.
"The Dubai story has sort of washed its way through the market and it seems that the whole thing is a relatively contained issue," said Boris Schlossberg, director of FX research at GFT in New York.
"We also had a rate hike in Australia which is bullish for risk and we've got very good data from the euro zone. So as economic data continue to surprise to the upside, the recovery bulls have the upper hand and this is good for risk appetite and bad for the dollar."
In early New York trading, the euro rose 0.6 percent to
$1.5094
The Australian dollar, meanwhile, rose nearly 0.8 percent
on the day to US$0.9220
Against the yen, the dollar was up 0.6 percent at 86.83
yen
On Tuesday, the dollar's fortunes against the yen turned after the BOJ said it will provide 10 trillion yen in three-month funds at a fixed rate of 0.1 percent in a bid to enhance monetary easing by trying to bring down longer-term rates.
Political pressure on the BOJ to avert recession has grown, but Tuesday's decision is seen as a way to avoid a return to a narrow form of quantitative easing, under which the BOJ slashed rates to zero and flooded markets with cash in 2001-2006.
The euro rose 1.1 percent to 131.05 yen
"The moves by the BoJ caused a big shakeout of long yen positions, and a weaker yen has helped asset price movements elsewhere ... as the weak yen to a degree -- but maybe not as much as dollar -- drives the risk trade," said Stephen Gallo, head of FX analysis at Schneider FX in London.
Meanwhile, the Swiss National Bank reiterated on Tuesday
its stance of stemming the franc's rise versus the euro.
[ID:nLAG005964]. As a result, traders were hesitant to test the
SNB's resolve to keep the franc down. Early in New York, the
euro was little changed versus the Swiss currency at 1.5092
((gertrude.chavez@thomsonreuters.com; +1 646 223 6322; Reuters Messaging: gertrude.chavez.reuters.com@reuters.net))