* Waning Dubai concerns, RBA hike stoke risk appetite
* Yen falls after BOJ announces new funding operations
* Positive euro zone data adds to bullish global view (Adds comment, U.S. data, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, Dec 1 (Reuters) - The dollar slid 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 and sent 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 debt 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 reports showing better-than-expected European manufacturing data and strong German retail sales. For more details, see [ID:nGEE5B00BY] .
Stocks climbed and the euro and higher-yielding currencies such as the Australian dollar gained, with European share prices up 2 percent <.FTEU3> and Wall Street indices <.SPX> up 1 percent.
"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 mid-morning New York trading, the euro rose 0.6 percent
to $1.5091
AUSSIE GAINS, BOJ MOVES
The Australian dollar rose 0.8 percent to US$0.9220
Against the yen, the dollar was up 0.4 percent at 86.64
yen
The dollar's fortunes against the Japanese currency 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 bring down longer-term rates.
Political pressure on the BOJ to avert recession has grown, but Tuesday's decision was 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 0.9 percent to 130.81 yen
Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, said that overall, the BoJ moves will not be enough to slow yen buying versus the dollar in the long term.
"The new liquidity provision has not driven short-term yen rates sharply lower and yen longs have not been put in sufficient pain to force them to liquidate," he said.
The dollar briefly trimmed gains versus the yen after a U.S. manufacturing index declined in November. [ID:nWEN7001]. But analysts said it would not deter the market's risk-seeking. (Editing by Dan Grebler) ((gertrude.chavez@thomsonreuters.com; +1 646 223 6322; Reuters Messaging: gertrude.chavez.reuters.com@reuters.net)) ((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com)