* Pound erases early losses after BoE's rate cut
* Dollar down vs yen, Swiss franc and euro
* Market remains nervous about U.S. coronavirus outbreak
By Iain Withers
LONDON, March 11 (Reuters) - The U.S. dollar resumed its
descent against the Japanese yen and Swiss franc on Wednesday as
fears over the spreading coronavirus pushed investors into safe
havens, while the British pound recovered after Bank of England
unexpectedly cut interest rates.
Central banks and governments around the world are
scrambling to limit the economic damage of the coronavirus
outbreak, which has sent stock markets into a tailspin as
investors head for the safety of government bonds.
Sterling initially fell as much as 0.4% against the dollar
and 1.2% against the euro after the BoE's cut its benchmark rate
by 50 basis points, to 0.25%. But the pound rebounded as the move - including actions to
support bank borrowing - reassured some investors. The pound
rose to $1.2955 GBP=D3 , up 0.6% on the day.
Against the euro, the pound was last up 0.1% at 87.38 pence
per euro. EURGBP=D3
Britain's finance minister, Rishi Sunak, is expected to
direct further firepower at the British economy in his first
budget later on Wednesday, expected at 1230 GMT.
The dollar was down particularly sharply against the
safe-haven Japanese yen and Swiss franc. It lost 0.5% to 105.11
yen JPY= after earlier falling more than a full yen from
Tuesday's high of 105.915.
The U.S. currency had fallen as low as 101.18 on Monday.
While Japan may already be in recession, its currency usually
rises at times of market stress because of the country's current
account surplus and its net creditor status.
The Swiss franc gained 0.4% to 0.93595 franc per dollar
CHF= . The euro also rose 0.4% to $1.13175 EUR= .
The dollar had jumped on Tuesday as investors hoped global
monetary policymakers would offer further stimulus to offset
trade and travel disruptions. But lack of clarity on what
Washington will do has kept many investors on guard.
U.S. President Donald Trump said on Tuesday he would ask
Congress for a payroll tax cut and other "very major" stimulus
moves, but the details remain unclear. "It is too early to say the market sentiment has turned
positive. Yesterday's rebound in the dollar and in risk assets
is a type of a rebound you often see in a downtrend," said
Shinji Ishimaru, senior currency analyst at MUFG Bank.
"In addition to economic measures, the focus will be on how
much the U.S. can contain the infections to keep the economy
going. That is a very big unknown," he said.
Money markets are fully pricing in a further 10-basis-point
cut by the European Central Bank when it meets on Thursday.
=ECBWATCH
The BoE rate cut follows similar moves by U.S. and Canadian
central banks and put more pressure on the ECB to act, although
it has limited room with rates already negative.
"The pound sold off initially on the aggressive move but the
statement shows that their (BoE) action is co-ordinated with the
Treasury and the measures include a package for lending," Jane
Foley, senior currency strategist at Rabobank, said.
"Altogether the statement suggests lots of co-ordination.
This is reassuring and should help limit the impact on the
economy and that could also help support the pound."