* Dollar falls as risk aversion cools
* U.S. stock futures rise after Citigroup plan
* Real economy picture remains weak
* German Ifo underlines struggling euro zone economy (Recasts, adds comments, changes byline, dateline, previous
LONDON)
By Vivianne Rodrigues
NEW YORK, Nov 24 (Reuters) - The U.S. dollar fell against the euro and a basket of currencies on Monday as risk aversion eased after the U.S. government agreed to inject $20 billion of new capital to rescue troubled Citigroup (C.N: Quote, Profile, Research, Stock Buzz).
European stocks rose, while U.S. stock futures were all pointing to a positive Wall Street open in a sign of higher risk appetite, which has been linked recently to dollar weakness.
While investors still remain cautious due to ongoing concerns about a global recession, they welcomed the U.S. government's $300 billion-plus lifeline to prevent the collapse of the world's largest banking group [ID:nSP406175].
"The forex market continues to be all about risk appetite and its proxy, equities," said Dustin Reid, director of FX strategy at RBS Global Banking & Markets in Chicago.
The rescue plan "clearly sends a signal that some of the U.S. banks, in the government's view, are too big and important to fail. The move should also help to calm overall market sentiment for the very short-term."
In morning trading in New York, the euro was up 1.4 percent on the day versus the dollar at $1.2758
The U.S. currency slipped 0.2 percent to 95.70 yen
The dollar was also 0.8 percent lower at 86.717 against a basket of currencies .DXY.
"Looking back on it, I think the market is concluding that maybe it was the wrong thing to let Lehman fail," said Chris Turner, head of FX strategy at ING in London.
"So maybe this (Citi package) is the new model for how you handle the systemically-important banks in the States," he added.
Demand for U.S. stocks rose, while the dollar has been falling since late Friday after news leaked that New York President Timothy Geithner will be named by U.S. President-Elect Barack Obama as Treasury secretary.
Obama is expected to officially appoint Geithner at a press conference in Chicago at 12 p.m. Eastern time (1700 GMT) and may also discuss an economic stimulus package.
REAL ECONOMY CLOUDS
The euro earlier eased after a below-consensus reading for the German business climate underlined weakness in the German economy, keeping expectations high for cuts in euro zone interest rates [ID: nBEB002256].
The Munich-based Ifo economic research institute said its business climate index declined to 85.8 in November from 90.2 in October, hitting its lowest since February 1993. The reading was weaker than forecasts of a 88.7 reading.
"(The reading) was truly awful and suggests that the fall in output in the euro zone's largest economy gained both momentum and traction in the fourth quarter," said Tom Vosa, head of market economics at nabCapital in London.
"The sharp slowdown seen in Germany and elsewhere will put pressure on the ECB to cut rates aggressively," he said, adding that the ECB may cut rates by 75 or even 100 basis points from 3.25 percent next month.
In Britain, Prime Minister Gordon Brown and his finance minister, Alistair Darling, are expected to announce a package totaling up to 20 billion pounds ($30 billion), by cutting sales tax and offering help for businesses, low earners and struggling home owners. [ID:nL0672267] (Additional reporting by Veronica Brown in London; Editing by Chizu Nomiyama)
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