FOREX-U.S. dollar down vs yen, but off 13-year lows

* Dollar at 13-1/2-yr low vs yen, Senate rejects bailout

* White House, U.S. Treasury to step in to help automakers

* Dollar index on track for worst week since 1995 (Updates prices, adds comment)

By Gertrude Chavez-Dreyfuss

NEW YORK, Dec 12 (Reuters) - The dollar staged a partial recovery from a fall to a 13-year low against the yen on Friday as investors grew more optimistic that the White House or the U.S. Treasury will help save the troubled auto sector.

U.S. Senate talks on a $14-billion rescue package for the stricken sector collapsed late on Thursday, heightening global recession fears and prompting a flight from risky assets such as equities and emerging markets. For more see [ID:nLC248861].

That had pushed the yen higher, particularly against high-yielding currencies.

The White House's willingness to temporarily prop up ailing car makers helped the dollar recover against the yen, said David Watt, senior currency strategist, at RBC Capital Markets in Toronto.

"But the intervention risk is there and traders are not willing to push the dollar lower in case Japan intervenes," he added.

The dollar had tumbled to 88.1 yen , the lowest since July 1995, according to electronic trading platform EBS, but trimmed losses as the greenback's plunge spurred speculation Japanese authorities may intervene to low the yen's strength.

By midday in New York, the dollar traded at 91.27, still down 0.6 percent on the day. The dollar plumbed its all-time low against the yen at 79.75 in 1995.

The dollar's gains have also eased this week, pushing its value versus a basket of currencies to its worst weekly loss since 1995. The ICE Futures' dollar index .DXY was up 0.3 percent on Friday at 83.884, but it was down about 3.4 percent this week.

Traders have been taking profits on the currency's dramatic gains in recent months, with some analysts speculating that repatriation flows in the dollar may be drying up as credit conditions have improved.

"The environment has become challenging for the dollar," said Shaun Osborne, chief currency strategist at TD Securities in Toronto.

"Perhaps people are looking at the dollar and it's not looking great because of the U.S. economy's low growth and low interest rates. We are perhaps looking at the cusp of a big sell-off in the dollar."

INTERVENTION RISK

The dollar gained some breathing room against the yen but traders are on high alert for any intervention by the Japanese Finance ministry, although Japanese officials have suggested intervention is not on their agenda right now.

"But the risks are there and have to be taken into account," said Vassili Serebriakov, a currency strategist at Wells Fargo in New York.

Japan has a long history of trying to stem yen strength by intervening to buy dollars, although it has stayed out of the market since a 35 trillion yen ($382 billion) campaign over 15 months ended in March 2004.

The Ministry of Finance has moved away from heavy intervention because that last campaign had mixed results.

"But even if it occurs, historical experience tells us it could take months before the general trend of yen strength is reversed," the Wells Fargo analyst said.

Analysts said demand to pull out of risky positions remained high, which battered higher-yielding currencies like the Australian and New Zealand dollars against the yen. They added the yen would remain a big beneficiary of such moves.

The euro fell 0.4 percent to 121.98 yen, while the Australian dollar tumbled 2.1 percent to 60.08 yen .

The euro was little changed at $1.3356, while sterling traded 1.0 percent lower at $1.4873.

The Australian and New Zealand dollars also fell 1.9 percent and 1.0 percent against the U.S. dollar, respectively. (Additional reporting by Steven C. Johnson; Editing by James Dalgleish)

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