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FOREX-Euro up on hawkish Trichet; yen trips as stocks rise

By Lucia Mutikani

NEW YORK, Dec 6 (Reuters) - The euro rose against the dollar and yen on Thursday as European Central Bank President Jean-Claude Trichet's hawkish comments on inflation raised the specter of an interest rate hike in the euro zone.

The single currency also got a boost from an improvement in risk appetite, with U.S. stocks ending higher after U.S. President George W. Bush announced plans aimed at slowing the tide of homeowner foreclosures and shield the economy from the subprime mortgage crisis.

An estimated 1.2 million homeowners could benefit from the assistance plan to avoid foreclosure over the next couple of years, according to Bush.

"We had more hawkish comments than expected from the ECB president. That really kicked it off. He (Trichet) down played the risks to growth and focused on inflation. That's what caught a lot of people off guard," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, New Jersey.

The ECB left its benchmark interest rate steady at 4 percent, but Trichet warned of "strong upward pressure" on inflation, adding that some central bank governors had favored a rate increase.

In late afternoon New York trade, the euro was trading up 0.2 percent at $1.4630 , after touching a session high of $1.4652. The euro also rose against the yen, climbing 0.5 percent to 162.75 EURJPY.

Against the yen, the dollar rose 0.3 percent to 111.22 , lifted by firmer U.S. stocks, but lost ground against the high-yielding Australian and New Zealand currencies.
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