(Updates prices, adds comment)
* Yen retreats as Shanghai shares rebound
* Cautious tone in Fed minutes holds back dollar
* Euro slips as markets await Greece’s reform proposals
By Gertrude Chavez-Dreyfuss
NEW YORK, July 9 (Reuters) - The safe-haven yen and Swiss franc fell on Thursday after Chinese stocks rebounded and worries about Greece eased somewhat as Europe awaited reform proposals from the debt-burdened country to back its request for another three-year loan.
The 6 percent gain in Shanghai shares was enough to restore optimism from investors after a rough month dominated by Greece’s troubles and a more than 30 percent drop in China’s main stock market indexes.
Those elements were behind the biggest one-day push this year into the yen on Wednesday, although on Thursday, the Japanese currency gave up some of those gains.
The yen and Swiss franc typically rally when there is financial or geopolitical stress as investors seek out safer and more liquid investments.
“The FX market is generally taking its cue from overall risk sentiment and so equities are higher today,” said Mark McCormick, currency strategist at Credit Agricole in New York. “Risk-sensitive currencies such as the Aussie dollar are higher as well.”
Greece was still very much a concern for investors. Greek Prime Minister Alexis Tsipras was finalizing a tough package of tax hikes and pension reforms to send to euro zone authorities by midnight in a race to secure agreement at the weekend on a third financial rescue for his country.
European officials are now inclined to allow Greece to restructure its debt.
In late New York trading, the dollar was up 0.5 percent against the yen at 121.32. The greenback also rose against the Swiss franc, up 0.3 percent at 0.9485 franc.
The euro, meanwhile, was down 0.6 percent against the dollar at $1.1011 having topped $1.11 in Asian trade.
“Signs that the EMU (European Monetary Union) could be broken up will likely lend itself into a surge in downside pressure on the euro,” said Jane Foley, senior FX strategist, at Rabobank in London.
“That said, any sign that the system will remain coherent in the absence of its weakest link could then lend support.”
A fall in U.S. yields, meanwhile, following the release of minutes of the Federal Reserve’s June meeting offered little hope to dollar bulls. The dollar index though was up 0.3 percent at 96.620.
The dollar slipped after U.S. initial jobless claims rose last week to their highest since February. Initial claims for state unemployment benefits rose 15,000 to a seasonally adjusted 297,000 for the week that ended July 4, the U.S. Department of Labor said on Thursday. (Reporting by Gertrude Chavez-Dreyfuss; Editing by Peter Galloway and Diane Craft)