March 19 (Bloomberg) -- The dollar declined against the yen on speculation the Federal Reserve's six interest-rate cuts since September won't be enough to stem credit-market losses and revive the economy.

The U.S. currency fell starting in Asian trading on speculation some European and U.K. banks were facing funding difficulties. The dollar pared some losses after better-than- forecast earnings from Morgan Stanley and as regulators for Fannie Mae and Freddie Mac eased capital requirements to allow them to buy more loans.

``The downside risk for the dollar still exists,'' said Carl Forcheski, vice president on the corporate currency sales desk at Societe Generale SA in New York. ``The Fed's bigger worry right now is a total breakdown of the financial market; future rate cuts are still on the table.''

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The dollar declined to 99.26 yen at 12:12 p.m. in New York, from 99.85 yesterday, when it surged 2.7 percent, the most since January 1999. The yen advanced to 155.18 per euro, from 155.95. The dollar traded at $1.5635 per euro, from $1.5625.

The dollar earlier erased yesterday's gain against the euro, which came as U.S. stocks soared the most in five years on the Fed's 0.75 percentage point rate cut to 2.25 percent. The yen rose as concern that credit-market losses will widen led traders to exit carry-trade purchases of higher-yielding assets funded in those currencies.

Stocks Little Changed

The dollar dropped to 1.0009 Swiss franc from 1.0024. The franc, often favored in times of crisis, has advanced 14 percent this year. The South African rand fell 0.8 percent to 8.002 per dollar, from 7.9325 yesterday.

The pound fell to the lowest in two weeks after two of seven policy makers voted in favor of lowering rates at the March 6 meeting where they kept the benchmark at 5.25 percent. The pound declined 1 percent to $1.987.

China's yuan rose 0.3 percent, the most this month, to 7.0631 per dollar on speculation China's central bank is stepping up the pace of currency appreciation to curb inflation.

Currencies from commodity exporters, such as Australia and Canada, fell against the dollar as oil and gold dropped. Gold futures plunged the most since 2006, while oil fell more than $4 a barrel.

The Standard & Poor's 500 index was little changed, after gaining as much as 0.8 percent earlier. Morgan Stanley said net income fell 42 percent in the first quarter to $1.45 a share. That compared with the average estimate of $1.01 a share in a Bloomberg survey. Stronger-than-forecast earnings yesterday from Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. helped spark the dollar rally.

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