The dollar rose against the euro and yen on Monday after US authorities bailed out two mortgage finance giants, easing investor worries over the future of global markets, dealers said.

The euro fell to I 4165 dollars in London trading to mark a fresh 11-month low, from 1.4260 dollars in New York late on Friday.

Against the Japanese currency, the dollar rose to 108.63 yen from 107.67 yen.

"The US government's plan to takeover Freddie Mac and Fannie Mae aims to provide stability to financial markets and support the availability of mortgage finance," said Bank ofTokyo-Mitsubishi economist Lee 1 lardman in London.

The US Treasury Department announced on Sunday, when markets were closed, that it would put Freddie Mac and Fannie Mae under strict federal control and may invest up to 200 billion dollars in them.

Fannie Mae and Freddie Mac, government-chartered, shareholder-owned firms which provide liquidity to the US housing market, have been whipsawed by the financial meltdown in the past year.

The companies have lost some 90 percent of their value on fears of further losses from mortgage defaults by "subprime" customers, who were given loans despite patchy credit histories.

The US government plan could potentially cost taxpayers billions of dollars and Washington's decision to buy back preferred stock would mean common shareholders still risk losing millions of dollars, dealers said.

The market was further relieved by reports that South Korean and Japanese banking companies were considering investing in Lehman Brothers, one of the Wall Street banks worst-hit by the subprime debacle.