* Yen rallies, high-yielders fall on deleveraging
* Risk aversion remains despite Citi rescue
* Weak German Ifo underlines struggling euro zone economy
(Changes dateline, byline, adds comment, updates throughout; previous HONG KONG)
By Naomi Tajitsu
LONDON, Nov 24 (Reuters) - The yen climbed on Monday while higher-yielding currencies stumbled, as investors continued to dump risky assets after news of a U.S. government rescue plan for Citigroup did little to convince the market that the end of the financial crisis is near.
Market participants applauded the U.S. government's $300 billion lifeline to prevent the collapse of the world's largest banking group, but analysts said ongoing concerns about a global recession would keep the broad deleveraging trend intact.
"The Citigroup plan is a good thing in the sense that its good for financial stability, but concerns still remain about the state of the global economy and the state of the financial system worldwide," said Chris Gothard, currency analyst at Brown Brothers Harriman in London.
"The trend over the last couple of months has been dollar and yen strength mainly due to investor caution and deleveraging. We don't really see that changing."
The euro briefly slipped as low as $1.2568, pressured as ongoing deleveraging of risky assets kept the single European currency on the back foot. By 1010 GMT, it was up 0.6 percent at $1.2660.
The euro pulled back, having also come under some early selling pressure after a weak reading for the German business climate underlined weakness in the German economy and kept expectations high for cuts in euro zone interest rates.
The Munich-based Ifo economic research institute said that its business climate index declined to 85.8 in November from 90.2 in October, hitting its lowest since February 1993. The reading was weaker than forecasts a 88.7 reading.
Analysts said that the figure reminded the market that the euro zone is in a recession and kept expectations intact that the European Central Bank will have to keep cutting interest rates.
"(The reading) was truly awful and suggests that the fall in output in the euro zone's largest economy gained both momentum and traction in the fourth quarter," said Tom Vosa, head of market economics at nabCapital in London.
"The sharp slowdown seen in Germany and elsewhere will put pressure on the ECB to cut rates aggressively," he said, adding that the ECB may cut rates by 75 or even 100 basis points from 3.25 percent next month.
Against the yen, the euro hit a session low of 119.58 yen before recovering to around 120.77 yen, little changed on the day.
An early climb in European shares, which cheered the Citi news by rising 3.8 percent, helped to provide a boost to the euro, but investors remained extremely wary about taking on risk.
AUSSIE, KIWI SLIDE The dollar fell 0.6 percent to 95.24 yen, as investors continued to flock to the low-yielding Japanese currency after shedding positions in higher-yielding ones in an ongoing reversal of the carry trade.
Some in the market said that the dollar/yen losses were limited by news that U.S. President-Elect Barack Obama will nominate New York Federal Reserve Bank President Timothy Geithner and former Treasury Secretary Lawrence Summers as his top economic lieutenants.
Once lauded for their high yields, the Australian and New Zealand dollars continued to suffer on Monday, having dropped in tandem with falling shares, due to investors' unwillingness to hold risk.
The Aussie dollar fell 0.1 percent to $0.6296 and hovered in range of a 5 1/2-year low near $0.6007 hit a month ago. Against the yen, it tumbled nearly 1 percent to 60.04 yen.
The New Zealand dollar fell half a percent to $0.5322, staying near a six-year low of $0.5190 hit late last week. It fell 2.2 percent to 50.53 yen.
Sterling was little changed at $1.4870, as market participants awaited the UK government pre-budget report due later in the day.
(Additional reporting by Veronica Brown; Editing by Toby Chopra)