* Yen slides, dlr dips vs euro on US auto bailout hopes
* US could vote on rescue plan as early as Wednesday
* BoJ's Shirakawa comments on FX mkt weigh on yen
* Yen losses seen limited, risk aversion stays high
(Changes byline, adds quotes, updates prices)
By Jessica Mortimer
LONDON, Dec 10 (Reuters) - The yen fell broadly, while the dollar dipped to a two-week low against the euro on Wednesday as a tentative agreement by U.S. lawmakers to rescue stricken automakers helped cool extreme risk aversion.
The White House and congressional Democrats reached a deal in principle on a $15 billion plan to bail out and restructure auto firms, with officials saying the House of Representatives could vote on it as early as Wednesday [ID:nN09294627].
The news bolstered global shares by 0.78 percent .MIWD00000PUS and weighed on the low-yielding yen.
"The market is focusing very much on the bailout deal for automakers," IDEAglobal senior strategist Maurice Pomery said.
"We're seeing a bit of a short squeeze that is pushing the yen lower," he added.
A tentative improvement in sentiment cooled a rush to unwind carry trades, which use the yen -- whose interest rate is near zero -- to fund purchases of higher-yielding assets.
Analysts noted that fears of Bank of Japan intervention to prevent too much yen strength also weighed on the currency after BoJ Governor Masaaki Shirakawa said on Wednesday he was watching forex moves carefully [ID:nTKF003197].
"There is a fear that the BoJ may intervene if dollar/yen falls below 90 yen," ING head of forex strategy Chris Turner said.
At 1200 GMT, the dollar rose 0.7 percent to 92.73 yen
Cooler risk aversion also weighed on the dollar, with the euro
IDEAglobal's Pomery noted, however, that liquidity is extremely weak in the run-up to Christmas, with most market players only trading if they have to.
"This means that what is no more than benign interest is producing swings that are bigger than normal," he said.
US BAILOUT IN FOCUS
Analysts believe the falls in the yen are likely to be short-lived as global recession fears keep risk aversion high.
The prospect of interest rates in other developed countries falling towards the low rates in Japan will also keep the Japanese currency supported, they said.
Traders waited to see whether the House of Representatives would approve the automaker bailout, which includes conditions to provide low-interest loans to avert a threatened industry collapse if one of the big three car firms were to fail.
Some market participants are sceptical on whether such a plan, if passed, would actually save the struggling auto sector, while others argue that it would ultimately do little to cure the global recession.
"The market may yet reach a stage where interest in risk assets cannot be justified by the underlying conditions in the global economy," analysts at UBS said in a research note. (Reporting by Jessica Mortimer; editing by Stephen Nisbet)
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