Dollar firms on Bush stimulus plan

NEW YORK, (AFP) -

The dollar was generally firm Friday after US President George W. Bush called for a 140-billion-dollar stimulus plan aimed at kick-starting a flagging economy.

The euro traded at 1.4619 dollars around 2200 GMT, down slightly from 1.4640 late Thursday.

The dollar was at 106.85 yen, up from 106.59 yen on Thursday.

Bush urged Congress Friday to pass a stimulus plan worth "around one percent" of gross domestic product to galvanize an economy that some fear is on the brink of recession.

The announcement came amid a growing consensus on the need to enact a plan to help stave off recession with a stimulus program based on tax rebates and breaks for businesses.

Bush said the package "must be big enough to make a difference in an economy as large and dynamic as ours, which means it should be about one percent of GDP." Treasury Secretary Henry Paulson said that would put the package at around 140 to 150 billion dollars.

He added that the initiative "should be built on broad base tax relief that will directly affect economic growth and not the kind of spending projects that would have little impact on our economy."

Many economists expect the Federal Reserve to lower interest rates by a further half a percentage point at its January 29-30 meeting as bad news flows unabated on house prices and investment banking losses. The Fed already has cut a percentage point from its federal funds rate since September.

Elsewhere, the pound remained under pressure as weak British retail sales figures boosted market expectations that interest rates will fall in February.

Retail sales fell 0.4 percent on the month in December, confounding analyst forecasts for no change.

In late New York trading, the dollar was at 1.0980 Swiss francs, down from 1.1010 late Thursday.

The pound was at 1.9553, down from 1.9710.