* Yen falls 0.8 percent vs euro, declines broadly
* European plans to recapitalise banks soothe investor jitters
* U.S. plans to inject $250 billion into banks -sources
* Underlying worries about weakening global economy persist
By Masayuki Kitano
TOKYO, Oct 14 (Reuters) - The yen fell 0.8 percent against the euro on Tuesday after European governments unveiled steps to shore up their banking systems, raising hopes for an easing of the credit crisis.
Britain, Germany and France announced plans on Monday to recapitalise their banking systems, helping rekindle risk appetite and triggering selling of the low-yielding yen, which rallied last week as investors dumped risky carry trades.
"The yen had been bought due to risk aversion, but such moves are likely to subside for now," said Hiroshi Yoshida, a currency trader at Shinkin Central Bank.
More help for banks was on the way, with the United States poised to announce similar steps to bolster banks' capital.
The United States aims to inject $250 billion into U.S. banks in a new bid to calm rattled markets, with about half going to the country's top nine institutions, people familiar with the plan said on Monday. [ID:nN13467632]
Japan's finance ministry unveiled a series of steps on Tuesday aimed at stabilising financial markets, including enacting a law enabling public fund injections into regional banks. [ID:nT212163]
The euro rose 0.8 percent against the yen compared to late U.S. trading on Monday, and stood at 139.70 yen after going as high as 141.00 yen
High-yielding currencies such as the Australian and New Zealand dollars also rose against the yen
Due to Japan's low interest rates, the yen has often been used to fund carry trades, in which investors sell low-yielding currencies to invest in higher-yielding currencies and assets.
Such selling of the yen often gains steam when investors' risk appetite recovers.
"The yen is likely to come under selling pressure and to be pushed back," said Masaki Fukui, a senior market economist for Mizuho Corporate Bank.
But there were doubts about how long the rebound in higher-yielding currencies against the yen would last given worries about the worsening outlook for the global economy.
"These are steps taken to tackle the crisis in the financial sector, but the issues at the root have not changed," said a trader for a major Japanese bank, referring to worries about the global economy.
In addition, banks may remain cautious about taking on credit risks and lending out money, particularly to hedge funds, said Shinkin Central Bank's Yoshida.
Wild market swings and the yen's rapid appreciation have forced Japanese retail investors, once a force to be reckoned with in the high-yielding markets, to curb positions in cross yen pairs.
According to data from the Tokyo Financial Exchange, one of the main intermediaries in Japan's margin trading market, margin traders at the exchange have slashed their long positions in all cross yen pairs down to a 16-month low.
Against the dollar, the euro gained 0.5 percent to $1.3664