By Naomi Tajitsu LONDON, Nov 10 (Reuters) - The euro climbed on Monday after China announced major initiatives to stimulate its economy, which cooled risk aversion and boosted share prices while putting the dollar and the yen under selling pressure. European shares rose roughly 3 percent, tracking strong Asian equities. This supported higher-yielding currencies such as the euro and the Australian dollar, which have suffered in the recent environment of extreme risk aversion. Risk demand also improved after financial officials from the Group of 20 nations at a weekend meeting said they would take "all necessary actions" to get financial markets back to normal and counter the backlash of the credit crisis [ID:nN09399362]. China launched an economic stimulus package on Sunday worth nearly $600 billion in what could mark the start of a round of big spending or interest rate cuts to stave off a recession in many countries. See [ID:nN09395080]. Analysts said that the initiative was unlikely to provide an immediate fix to the struggling global economy, while acknowledging that it was a step in the right direction and highlighted the potential for fiscal stimulus from countries that are not hampered by big budget deficits. "Risk appetite seems to be a bit better because nations are doing more to boost their economies," said Paul Robson, a strategist at RBS. "Moves like China's could focus attention on countries who have room to tweak or change fiscal policy quite aggressively." Countries around the world have been slashing interest rates to buffer their economies against the negative impact of the global downturn, while many nations are mulling fiscal measures to essentially spend their way out of recession. The Bank of England shocked markets last week by lopping 1.5 percentage points off its benchmark rate to 3.0 percent, its lowest since the 1950s, while the European Central Bank cut rates by 0.5 percentage points to 3.25 percent. ECB President Jean-Claude Trichet said on Monday the central bank won't change its inflation-focused strategy [ID:nLA219576] On Sunday, Trichet reiterated that the ECB does not exclude cutting rates in December [nSYU005489], underscoring market expectations that the central bank will continue to cut rates to shore up its economy. At 1124 GMT, the euro rose roughly 1.4 percent against the dollar to a session high of $1.2927. Sterling also rose, climbing 0.8 percent to $1.5870. The yen fell broadly, pushing the dollar up one percent to 99.30 yen, while the euro rose two percent to 128.03 yen . The Australian dollar rose 2.7 percent against the dollar , and climbed 2.2 percent against the yen . The high-yielding Aussie dollar was among the biggest beneficiaries of the lull in risk aversion, even as the Reserve Bank of Australia cut its growth forecast on Monday. RECESSION FEARS REMAIN Despite share price rallies, currency markets remain jittery, with ongoing worries about a global recession ensuring any recovery in risk appetite remains tentative. Analysts also expressed concern that China has had to take such drastic action to tackle the economic crisis. "Even this huge package will hardly prevent the global recession. Euro/dollar should therefore end the current correction phase with a break to the downside," analysts at Commerzbank said in a note to clients. On Friday, key U.S. data emphasised the problems facing the world's largest economy as it lost 240,000 jobs during October. Figures on Monday showed that industrial output in France and Italy fell in September [ID:nLA193820] [ID:nLA253162], reinforcing the view that a euro zone recession could be deep. Adding to the gloomy euro zone economic picture was a fall in regional sentiment, with the headline reading of the Sentix index falling to its weakest level since the survey was published in 2002 [ID:nLA246799].

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