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Sunday, 09/14/2008 5:39:30 PM

Sunday, September 14, 2008 5:39:30 PM

Post# of 33753
U.S. dollar tumbles after Lehman talks falter
Sun Sep 14, 2008 10:25pm BST
WELLINGTON, Sept 15 (Reuters) - The U.S. dollar tumbled in early trade on Monday on increasing worries over the U.S. financial sector after talks to sell Lehman Brothers Holdings (LEH.N: Quote, Profile, Research) faltered over the weekend.

Barclays Plc (BARC.L: Quote, Profile, Research), which had appeared to be frontrunner to take over Lehman -- excluding its toxic mortgage-related assets -- said it pulled out of the bidding, as top bankers and regulators met for a third day to try to resolve the crisis.

The British bank withdrew because the U.S. government wouldn't provide financial guarantees, according to a person familiar with the matter. "Growing worries about the health of the U.S. financial sector will likely spur speculation about near-term Fed rate cuts, which will likely weigh on USD and provide some support for NZD/USD," said Bank of New Zealand currency strategist Danica Hampton.

The euro jumped to $1.4325/28 <EUR=> at 2115 GMT, compared with $1.4225 in late U.S. trade on Friday.

The U.S dollar dropped to 105.93/95 yen <JPY=> versus 107.86 yen. (Reporting by Kazunori Takada)

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