SINGAPORE, Nov. 30 (MNI) - The U.S. dollar was mixed in the Asian morning Monday, as currency markets calmed a bit amid signs that the fallout from Dubai's proposed debt repayment delays could be contained.

The United Arab Emirates announced Sunday an emergency lending facility for its banking system to stem potential capital flight after member nation Dubai rocked markets by requesting a six-month debt payment moratorium for its Dubai World investment arm.

"Risk aversion is back with a vengeance as Dubai World's problems resonate across financial markets," said analysts at Bank of New York Mellon.

Due to a Friday holiday, stock markets in Dubai and Abu Dhabi are open Monday for the first time since Dubai's announcement last Wednesday, with stocks expected to plunge at the open.

But since Friday's abbreviated U.S. session, markets have shown indications of calming down, with euro-dollar recovered back through the $1.5000 mark while dollar-yen also settled within narrow trading ranges.

This morning, covering of short positions built up since Friday carried dollar-yen up to a Y87.05 high before it then eased back to trade between Y86.48 and Y86.88 through the rest of the morning.

That was in contrast to its choppy action after falling to a fresh 14-year low of Y84.82 last week and then bouncing back up to Y87.02 in New York on Friday.

Market participants were keeping a close eye on comments from Japanese officials since Friday as rhetoric about the yen's recent rise had increased, raising fears that Japanese authorities would intervene in the foreign exchange markets for the first time since 2004.

"The MOF has earned a powerful legacy from its history of foreign exchange intervention (last seen in 2004). Every time dollar/yen shows a sharp move, phone lines are abuzz with media queries about potential intervention," noted Bank of Tokyo Mitsubishi UFJ's Japan Strategist Naomi Fink.

"But talk is cheap, and the MOF appears happy to rely on private sector conjecture over intervention to curb short-term yen volatility," she said in a research note. "It remains understandably reluctant to engage in a battle of wills with speculators bent on pushing dollar-yen to Y70."

Euro-dollar also briefly weakened this morning to a $1.4965 but then recovered back through $1.5000 for a $1.5077 high just before midday here, up from $1.4960 near the U.S. close on Friday.

The pair had fallen to a $1.4827 low last week after jumping to a fresh high for 2009 so far at $1.5145.

"While lacking in details, suggestion is that European banks are the largest creditors, with exposures (to Dubai) in excess of $40 bln," said analysts at United Overseas Bank.

"The question is will this send the entire system into another tail-spin. Well, we think it is a set-back, but perhaps not fatal."

iahmad@marketnews.com ** Market News International Singapore Newsroom: 65-6559 6144 **