By Jeremy Gaunt, European Investment Correspondent

The dollar was generally lower as traders reversed some safety plays. Britain's battered pound gained around 1.8 percent on the greenback.

Government intervention was a key theme for the day with Japan throwing a $16.7 billion lifeline to companies threatened by the global financial crisis.

It was an attempt to try to shield the shrinking economy from more job losses and bankruptcies. Japanese state banks will buy shares in non-financial companies threatened by collapsing demand and frozen credit markets.

The move sent Tokyo's benchmark Nikkei <.N225> up 4.9 percent for the day.

In a similar vein, Russia's RTS index <.IRTS> was up 2.4 percent as news broke that the Russian government was reviewing a capital injection worth up to 900 billion roubles ($27.36 billion) into commercial banks.

Shares in Europe struggled but were supported by a rise in the Ifo institute's gauge of German business confidence.

The pan-European FTSEurofirst 300 <.FTEU3> index was flat. Overall, MSCI's main world stock index <.MIWD00000PUS> gained 1.2 percent.

In the meantime, a report showed that trust in business plummeted worldwide last year.

Some 62 percent of respondents told the Edelman Trust Barometer that they trusted businesses less than they had a year ago, with respondents in the United States and Western Europe more suspicious than those in emerging economies.

The biggest drops came in Ireland, where 83 percent of respondents said they had lost trust in business; in Japan, where 79 percent grew more wary; and in the United States, where 77 percent became more suspicious.

DOLLAR DECLINES

The euro jumped and Bund futures slipped after the rise in Ifo.

The euro was up more than 1 percent at $1.3308, after hitting a week high.

"It's a short-term relief to see that there hasn't been a further deterioration from the December reading but whether it is sustainable is rather debatable," said Audrey Childe-Freeman, senior FX strategist at Brown Brothers Harriman in London.

Britain's pound gained 1.9 percent to $1.4225 and the dollar was up 0.6 percent against the yen to 89.52.

Two-year Schatz yield was up 3 basis points at 1.698 percent. Earlier, the yield hit 1.747 percent -- its highest since January 8.

The 10-year Bund yield was flat at 3.326 percent. Earlier, the yield marched higher to 3.364 percent - its highest since November 26.