The storm had already claimed the lives of at least two people in China's Hainan and 16 people in the Philippines
But the situation remained tenuous as investors waited for further steps by governments to stabilise the global banking system and stave off a prolonged economic downturn, with focus shifting to a meeting of Group of Seven (G7) finance ministers and central bankers on Friday.
The low-yielding yen fell from a three-year high against the euro and a six-month peak versus the dollar hit the previous day, although both pairs were off lows by midday trade.
‘The yen crosses are relatively stable but they are not recovering,’ said Adarsh Sinha, currency strategist at Barclays Capital in London.
While the steps taken by leading global central banks and the UK government's plan to recapitalise British banks were important, ‘there are still downside risks unless other countries take similar sort of steps,’ he said.
At 1139 GMT, the euro was up 2.15 percent at 138.21 yen while the dollar was up 1.6 percent against the yen.
The euro also regained some ground against the dollar, rising 0.6 percent to $1.3702.
The high-yielding Australian dollar was up 5.7 percent against the US dollar at $0.7014, after hitting a five year low on Wednesday.
European equities were up 1 percent by midday trade.
US stock futures also pointed to a higher open, but markets were jittery after a ban on short sellers came to an end at midnight.
NEXT RISK EVENT: G7
Markets are looking to the G7 meeting, as well as a broader meeting of G20 countries for a more coordinated approach to the global financial crisis.
US Treasury Secretary Henry Paulson suggested on Wednesday the United States may follow in the UK's footsteps and inject capital into banks to strengthen their balance sheets.
But a British proposal to provide guarantees on interbank lending may meet resistance.
‘What is needed is a coordinated plan, they need to agree on a broad set of principles,’ said Barclay's Sinha.
‘If they can show that, then it will be a positive, but if they fail, we will see more of the turmoil.’
Markets also expect global central banks to cut rates further after the Fed, the ECB and the central banks of Canada, England, China, Sweden and Switzerland cut rates simultaneously on Wednesday.
‘Having embarked on this easing cycle, all of the central banks will find it difficult to pull back now,’ said Calyon strategists in a research note.
Markets will also keep an eye on further measures by central bank to revive frozen money markets.
On Wednesday, the ECB also halved the premium it charges banks for emergency overnight borrowing, upped the amount it pays on overnight deposits and offered unlimited weekly funds at a fixed rate. See.
London interbank offered rates (Libor) on Thursday showed a slight fall in overnight dollar rates, but three-month dollar rates increased.
The storm had already claimed the lives of at least two people in China's Hainan and 16 people in the Philippines
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