FOREX-Euro falls; EU stimulus package raises concerns

* Euro falls vs yen, dlr on risk aversion

* EU plans 200 bln euro stimulus package; mkts still jittery

* China cuts interest rates by 108 bps, yen pares gains

(Recasts, updates to add quotes, changes byline)

By Jessica Mortimer

LONDON, Nov 26 (Reuters) - The euro fell against the yen and the dollar on Wednesday as investors were pessimistic about whether a European stimulus package will be sufficient to ease the financial crisis.

Risk aversion kept hold in financial markets on fears about the looming global recession. This pushed European shares .FTEU3 down 1.2 percent and boosted the low-yielding yen, while further dollar repatriation flows and deleveraging supported the U.S. currency.

European Commission chief Jose Manuel Barroso proposed an EU-wide fiscal stimulus package worth 200 billion euros to revive economies across the region [ID:nLQ148816].

The draft proposal -- which is due to be debated by member states next month -- also said there is scope for further interest rate cuts by the European Central Bank.

Analysts said that the plan marked a step in the right direction, but uncertainty about its efficacy, and general concerns about a deep slowdown in the global economy were keeping investors in the mood to sell risky assets.

"The sentiment is one of high risk aversion. The stimulus packages are a first step and are welcome, but the fundamentals across the world are still negative and recession fears are not fading," said Commerzbank currency strategist Antje Prafcke said in Frankfurt.

"There are still concerns about whether the measures will work and how they will be financed."

The European plan follows the announcement on Tuesday of an $800 billlion U.S. plan to rescue its debt securities markets.

The euro EURJPY=R dropped 0.8 percent to 123.46 yen, while it slipped 0.7 percent against the dollar EUR= to $1.2969.

The dollar JPY= slipped 0.1 percent to 95.16 yen.