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FOREX-Currency markets calm in potential Omicron 'eye of the storm'

* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Iain Withers

LONDON, Dec 2 (Reuters) - Currency markets steadied on Thursday as investors waited for clues on the threat posed by the Omicron coronavirus variant and the speed at which the Federal Reserve will taper stimulus in the United States.

The dollar barely budged against most rival currencies on a further risk-off day for markets broadly, with jittery equity markets in Europe opening lower.

The first case of the Omicron variant was identified in the United States on Wednesday, weighing on markets, although much remains unknown about the new strain.

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"It seems like the market is getting a breather this Thursday morning in what could be the eye of the storm," FX analysts at Citi said in a note.

The dollar index, which tracks the greenback against six major currencies, was broadly flat on the day at 96.035.

The index swung lower last week after news of the Omicron variant first emerged, although it remains close to a 16-month high of 96.938 hit last month.

Currency volatility trackers remain at multi-month highs, however, suggesting big moves could still be in store.

Traders are also awaiting clarity on how quickly the Federal Reserve will taper its asset purchases, as central banks around the world grapple with how fast to unwind stimulus amid soaring inflation.

Fed Chair Jerome Powell reiterated in testimony to Congress on Wednesday that he and fellow policymakers will consider swifter action at their Dec. 14-15 meeting.

"Fed Chair Powell signalled clearly this week that the Fed is becoming more concerned over the persistence of higher inflation, and emphasized that they are prepared to take policy action to address upside risks to inflation," MUFG FX analysts said in a note.

"The comments provided strong guidance that the Fed is likely to speed up the pace of QE tapering in December."

The euro was steady versus the dollar at $1.13205.

The Japanese yen - which strengthened over the past week as investors sought safe havens - lost some of its recent gains versus the dollar, falling back 0.4% to 113.26 yen.

Sterling rebounded slightly by a quarter of a percent, lifting it above $1.33.

(Reporting by Iain Withers; Editing by Emelia Sithole-Matarise)