FOREX-US dollar sinks vs yen, rises vs euro as stocks swoon

* Yen rallies as stocks fall, recession worries grow

* US jobless claims spike, dollar gains vs high-yielders

* Surprise Swiss interest rate cut hits Swiss franc

* Still no deal for automakers

* For up-to-the-minute market news, click on FXNEWS (Updates prices, adds comments, changes byline)

By Gertrude Chavez-Dreyfuss

NEW YORK, Nov 20 (Reuters) - The U.S. dollar slumped versus the yen on Thursday, squeezed by Wall Street's plunge as fears of a worldwide downturn that was much deeper than initially thought made investors seek shelter in the safest assets.

The greenback and yen, meanwhile, rose against the euro and currencies of nations with high interest rates, like the Australian and New Zealand dollars, as investors sold risky assets such as stocks and commodities financed by loans denominated in the U.S. dollar and the Japanese unit.

Currency investors continued to track movements in the U.S. stock market, with the S&P 500 index sliding to an 11-1/2 year low as optimism about a deal for the ailing auto sector faded. U.S. Senate Democratic leader Harry Reid said there has been no viable auto industry plan "that can be passed by the House and Senate, and signed by the President."

Earlier, U.S. stocks rallied after a Senate Democratic aide said senators had reached a bi-partisan agreement on auto aid, briefly boosting the dollar versus the yen. That bounce, however, was short-lived.

"The price action in the stock market just reinforces the fact that there's a lot of negativity out there," said Joe Francomano, vice president of foreign exchange at Erste Bank in New York.

"So you're seeing the risk aversion trades -- dollar and yen -- perform well. And the only reason they're performing extremely well is because everybody continues to exit out of risk currencies such as the euro, sterling, and commodity currencies."

YEN OUTPERFORMS, HIGH-YIELDERS SLIDE

The dollar fell as low as 93.74 percent JPY=, a three-week low. It last traded at 94.07, down 1.9 percent. The euro fell to 116.82 yen EURJPY=, also a three-week trough, before climbing back up to 117.12, down 2.4 percent.

The dollar was also weighed down by data showing the number of Americans filing for jobless benefits spiked to a 16-year high of 542,000 last week. A report indicating that U.S. mid-Atlantic factory activity sank to an 18-year low further added to the gloom. For details, see [ID:nN20514012].

Against the dollar, the euro slipped 0.5 percent to $1.2458 EUR= while sterling fell 1.6 percent to $1.4726 GBP=.