The yen was steady to firmer against the euro and the Australian dollar on Wednesday, getting some respite after its fall to multi-month lows the previous day. The dollar dipped against the euro, but held on to much of the gains made the previous day on profit-taking in the wake of its slide the previous week, when the dollar suffered its biggest weekly fall since 1985 against a basket of six major currencies. The dollar, which tends to attract safe-haven buying in times of market stress, was also supported after U.S. shares slipped on Tuesday, a day after euphoria over a U.S. plan to rid banks of bad assets triggered a huge rally on Wall Street. But gains in global equities and commodity prices over the past few weeks suggested that risk appetite was on a recovery track, boding ill for the yen and the dollar against higher- yielding currencies, traders said. While there is uncertainty about how long this will last, risk aversion does seem to be easing for now, said Kimihiko Tomita, head of foreign exchange for State Street Global Markets in Tokyo. "There are clear signs of a recovery in risk tolerance among institutional investors," Tomita said. The euro held steady against the yen at 131.85 yen, having pulled back from a five-month high of 134.50 yen hit on trading platform EBS on Tuesday. Against the dollar, the euro was 0.1 percent higher at $1.3478, having retreated from a 2- month high of $1.3739 hit last week. With its rally last week, the euro has made a 50 percent retracement of its fall from a December peak of $1.4720 to this month's low of $1.2457. The euro was due for some profit-taking, said a trader for a Japanese trust bank, referring to the euro's 1.3 percent slide against the dollar on Tuesday. The dollar index saw its biggest weekly drop since 1985 last week, pummeled after a surprise announcement by the Federal Reserve that it would buy a large amount of long-dated Treasuries. That raised concern of an oversupply of the world's main reserve currency. The dollar was steady against the yen at 97.85 yen, having come off a one-month low of 93.55 yen hit last week. The dollar index was steady at 84.081, having come off a 2- month low of 82.631 hit last week. Although the yen has regained some ground after dropping on Tuesday to a five-month low against the euro and a 4- month trough versus the Australian dollar, it is likely to stay on the back foot, said a trader for a Japanese trust bank. "Its role as a safe-haven currency has diminished," the trader said. "There is no reason to buy the yen actively." The Australian dollar dipped 0.1 percent against the yen to 68.14 yen, off a 4- month high of 69.60 yen hit on Tuesday.

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