FOREX-Euro dips, yen surges as Boehner drops "fiscal cliff" plan
* Boehner fails to muster Republican support for his bill
* Uncertainty on fiscal cliff talks dents risky assets
* Thin year-end markets exacerbate FX swings
* Some players hold on to hope for eventual deal
By Masayuki Kitano
SINGAPORE, Dec 21 (Reuters) - The euro fell and the yen firmed on Friday after a U.S. Republican plan aimed at avoiding a fiscal crunch failed to gain enough support, deepening uncertainty over the chances of a deal by year-end.
Republican lawmakers delivered a rebuke to their leader, House of Representatives Speaker John Boehner, when they failed to back an effort designed to extract concessions from President Barack Obama in the "fiscal cliff" talks.
The latest twist threw into disarray attempts to head off $600 billion of indiscriminate tax hikes and spending cuts that could push the U.S. economy into recession next year.
The renewed jitters over the fiscal cliff dented risky assets and gave a lift to the safe-haven dollar.
The euro fell 0.3 percent to $1.3210, pulling away from an eight-month high of $1.33085 that it was hit on Wednesday on trading platform EBS.
The yen strengthened as traders trimmed some of their bearish bets against the Japanese currency, which has been pressured by market expectations that a new Japanese government would push the Bank of Japan into more forceful monetary easing.
A sudden plunge in U.S. stock index futures helped trigger a sell-off in risky assets and yen crosses, said Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore.
"The whole street has been massively long and in thinner holiday market conditions, it set off a perfect storm of stop- loss selling," Halley said.
The yen was put under pressure earlier in the week in the wake of a landslide election victory by Japan's conservative Liberal Democratic Party (LDP), which is committed to aggressive monetary easing.
The euro was down 0.6 percent against the yen at 111.06 yen . The single currency fell to 110.63 yen earlier on Friday, down about two yen from a 16-month peak of 112.59 yen that had been set on Wednesday.
The dollar fell 0.4 percent to 84.07 yen, pulling away from a 20-month high of 84.62 yen struck on Wednesday.
Earlier, S&P 500 E-Mini stock futures had plunged in a matter of seconds - falling as much as 3.6 percent. The market later rebounded from there, but futures were still down 1.4 percent.
The drop in S&P futures occurred as Boehner cancelled a vote on his proposal, which would have put Republicans on record as supporting a tax increase on those who earn more than $1 million per year.
"The market is jittery and unsure about what might happen," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore, referring to the outlook for the fiscal cliff talks.
Even with time running out to prevent the automatic tax hikes and spending cuts from taking effect, market players said the chances of a deal could not be ruled out.
The White House and Republicans are likely to press on with efforts to reach a compromise, said Kimihiko Tomita, head of foreign exchange for State Street Global Markets in Tokyo.
"I don't think either side wants to take the risk of seeing the economy worsen and unemployment rise," Tomita said.
"I think efforts will be made to search for a compromise to limit the impact of the cliff, for example to about 30 or 50 percent rather than the 100 that could result if there were a straight drop off of it," he added.
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