* Yen edges off 3-yr peak vs euro, 6-yr peak vs Aussie
* Nikkei falls 0.8 pct, other Asian bourses climb
* U.S. considers UK-style bank stake plan
* Market eyes G7 for more action after coordinated rate cuts
By Chikako Mogi
TOKYO, Oct 9 (Reuters) - The yen edged off a three-year peak against the euro on Thursday after coordinated global interest rate cuts gave a slight boost to some battered Asian stock markets and helped improve investor appetite for risk.
But market players were cautious about how sustainable any improvement is after the panic that has gripped financial markets around the world this week, sparking a sharp sell-off in stocks, higher-yielding currencies and commodities.
The Federal Reserve, the European Central Bank, the Bank of England and Switzerland, Canada and Sweden all slashed official rates by a half-percentage point on Wednesday to stem the worst global financial crisis since the 1930s. [ID:nCRISIS]
Even after the rate cuts, money markets remained all but frozen as market players looked for more concerted efforts, such as a central bank guarantee on interbank lending, to help relieve the troubles at the heart of the crisis.
Any such action may come after Group of Seven powers meet in coming days.
"The coordinated rate cuts have failed to ease tightness in the money markets, thus proving ineffective in resolving the credit crisis or removing fears about the global economy," said Hiroshi Yoshida, a trader at Shinkin Central Bank.
"Until these fears subside, investors will not take risks and the pessimistic sentiment will benefit the yen," he said.
The U.S. Treasury Department is considering taking ownership stakes in many banks to try to restore confidence, the New York Times reported on its Web site on Thursday, quoting government officials. [ID:nSP27587]
The Bush administration said U.S. Treasury Secretary Henry Paulson may discuss a plan floated by British Prime Minister Gordon Brown for concerted action to guarantee interbank lending.
The dollar rose 1.3 percent from late U.S. trade to 100.51
yen
The euro also recovered against the yen, up 1.5 percent at
137.12 yen
The euro inched up 0.1 percent to $1.3645
Traders expect investors still remain averse to risk to the benefit of the yen.
The yen has surged as investors have dumped carry trades in which they had used the low-yielding Japanese currency as a source of funds for buying higher-yielding currencies such as the Australian dollar.
The yen has also benefited because Japanese banks have suffered little from the credit crisis and the yen tends to serve as a safe-have currency due to Japan's current account surplus.
Asian stocks were choppy on Thursday. The Nikkei <.N225> dipped 0.8 percent after rising 2 percent at one point. On Wednesday the Nikkei plunged 9.4 percent, the biggest one-day drop since the 1987 stock market crash.
Equity markets in Seoul and Hong Kong posted gains. [MKTS/GLOB]
"The yen remains firm overall and looks set to stay strong given that market players see the coordinated rate cuts as too little, too late to fend off a credit crisis," said a senior trader at a European bank.
The Aussie rose 4 percent against the yen to 68.97
G7 officials will meet starting later on Thursday before the annual meetings of the International Monetary Fund and World Bank in Washington. Japan said it expects the G7 to send a strong message on stabilising the global financial system.
"The cuts may have had a psychological effect, but this isn't a fundamental solution to the credit crisis. Stocks will likely fall further, boosting the yen on risk aversion," a trader at a Japanese brokerage said.
(Editing by Sophie Hardach)