* Investors fear prolonged U.S. government shutdown
* Treasury's Mnuchin tries to soothe markets
* Concerns over more rate increases hurts stocks, greenback (New throughout, updates prices, market activity and commentsto U.S. market open, new byline, changes dateline, previousLONDON)
NEW YORK, Dec 24 (Reuters) - The U.S. dollar slipped againstthe euro and Japanese yen on Monday as concerns about thepossibility of a prolonged government shutdown and weak equitymarkets reduced demand for the greenback.
U.S. President Donald Trump's budget director and chief ofstaff said on Sunday the partial U.S. government shutdown couldcontinue to Jan. 3, when the new Congress convenes and Democratstake over the House of Representatives.
The U.S. Senate adjourned on Saturday, unable to break animpasse over Trump's demand for more funds for a wall on theborder with Mexico that Democrats are unwilling toaccept.
The dollar index against a basket of six major currencies .DXY dipped 0.39 percent to 96.577. It has fallen from aone-and-a-half-year high of 97.711 on Dec. 14.
MSCI's world equity index .MIWD00000PUS , which tracksshares in 47 countries, was 0.15 percent lower on the day anddown almost 7 percent in the past seven sessions, its worststretch of daily losses since January 2016. Wall Street was setto open lower in a shortened session on Monday. .Nurn:newsml:reuters.com:*:nL8N1YT0S3
U.S. Treasury Secretary Steven Mnuchin said on Sunday thathe had held a series of phone conversations with the heads ofthe six largest U.S. banks in an apparent attempt to soothenervous investors.
"The CEOs confirmed that they have ample liquidity availablefor lending," the Treasury Department said.
Mnuchin "also confirmed that they have not experienced anyclearance or margin issues and that the markets continue tofunction properly," the Department said.
"Mnuchin attempted some damage control," Win Thin, globalhead of currency strategy at Brown Brothers Harriman, said in anote, adding that the move could backfire.
"Yes, markets have been worried about recession and Fedpolicy mistakes. Until this weekend, however, markets were notthat concerned about liquidity or clearance issues. And withmarkets on edge, the last thing they needed was another issue toworry about," Thin said.
The Treasury Department also said Mnuchin will convene acall on Monday with the president's Working Group on FinancialMarkets, which includes Washington's main stewards of the U.S.financial system and is sometimes referred to as the "PlungeProtection Team."
The dollar has weakened since the Federal Reserve onWednesday adopted a less dovish outlook on further rate hikesthan many had hoped, raising concerns that the U.S. central bankwill keep raising rates into a weakening U.S. economy.
Trading volumes were thin on Monday with Japan closedand most global markets preparing to shut for the Christmasholiday on Tuesday.
Currency bid prices at 9:07AM (1407 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Session Euro/Dollar EUR= $1.1415$1.1367 +0.42% -4.84% +1.1420 +1.1353 Dollar/Yen JPY= 110.5700 111.2100 -0.58% -1.86% +111.1900 +110.5700 Euro/Yen EURJPY= 126.20 126.45 -0.20% -6.64% +126.7400 +125.9000 Dollar/Swiss CHF= 0.9896 0.9950 -0.54% +1.57% +0.9951 +0.9895 Sterling/Dollar GBP= 1.2691 1.2630 +0.48% -6.08% +1.2695 +1.2631 Dollar/Canadian CAD= 1.3598 1.3598 +0.00% +8.12% +1.3603 +1.3566 Australian/Doll AUD= 0.7052 0.7032 +0.28% -9.60% +0.7069 +0.7034 ar Euro/Swiss EURCHF= 1.1298 1.1310 -0.11% -3.35% +1.1344 +1.1299 Euro/Sterling EURGBP= 0.8993 0.9000 -0.08% +1.24% +0.9027 +0.8979 NZ NZD= 0.6723 0.6717 +0.09% -5.12% +0.6743 +0.6707 Dollar/Dollar Dollar/Norway NOK= 8.7595 8.7611 -0.02% +6.73% +8.7757 +8.7203 Euro/Norway EURNOK= 10.0010 9.9706 +0.30% +1.55% +10.0055 +9.9238 Dollar/Sweden SEK= 9.0577 9.0413 +0.55% +10.44% +9.0735 +9.0167 Euro/Sweden EURSEK= 10.3408 10.2838 +0.55% +5.10% +10.3480 +10.2639
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