* Oil falls $1,

* Oil falls $1, extending Fri sell-off as dollar rebounds
* Questions about demand recovery cast shadow over commods
* Investors wait for stocks to drain, consumption to recover (Updates prices, adds details)
By Osamu Tsukimori

TOKYO, Sept 14 (Reuters) - Oil fell more than a dollar toward $68 a barrel on Monday as a rebound in the beaten-down U.S. dollar and nagging concerns that prices may have run ahead of market fundamentals extended last week's late sell-off.
The U.S. currency rallied sharply against a basket of currencies as investors covered short positions following last week's slide of 2 percent to its lowest in a year, fuelled by funds flowing into riskier assets such as stocks and commodities and a drop in U.S. Treasury yields.

Kuwait has signed a $2.5 billion contract

KUWAIT, Sept 14 Kuwait has signed a $2.5 billion contract with General Electric Co and Hyundai Heavy Industries to build and operate a power plant in the north of the country, state news agency reported.
The Subbiya power plant, which is expected to come on stream in the summer of 2011, will produce 2,000 megawatts, or 20 percent of the country's current power output, KUNA said on Monday, citing Kuwait's Minister of Electricity and Water Badr al-Shuraian.
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"The contract includes importing and assembly of six gas turbines that will produce 1,320 megawatts in addition to six steam turbines generating 700 megawatts," al-Shuraian said.
Last month, Kuwait chose General Electric ( GE - news - people ) to build the Subbiya plant after it had the lowest bid for about 760 million dinars ($2.65 billion).
The U.S. giant beat other pre-qualified firms for the projects such as Germany's Siemens ( SI - news - people ), Japan's Mitsui & Co and Marubeni Corporation ( MARUY.PK - news - people ), Spain's Iberdrola ( IBDRF.PK - news - people ) Ingenieria Y Construccion, and Canada's SNC-Lavalin Limited.
In April, Kuwait issued a new tender to build turbines for the plant in the north of the country, saying it expected the cost to be far less than earlier estimates in excess of 700 million dinars.

FOREX-US dollar falls to near 1-year low as stocks rise

FOREX-US dollar falls to near 1-year low as stocks rise.

NEW YORK, (Reuters) - The U.S. dollar fell to a one-year low against major currencies Friday as optimism about the outlook for the global economy after strong Chinese data, encouraged investors to favor higher yielding currencies and stocks instead of the safety of the greenback.
Currencies such as the euro, sterling and the Australian dollar rose as stocks rose in Asia and European shares headed for a sixth consecutive day of gains. U.S. stock indexes were little changed at the opening.
The U.S. dollar was on track for its steepest weekly decline in almost four months against a basket of currencies and the euro, which hit a 2009 high of $1.4627 earlier.
The U.S. currency, perceived as a safe haven, tends to fall as investor risk appetite increases.
"Dollar selling momentum has picked up with the rise in equities, and some solid data out of China and the U.S. recently," said Win Thin, a currency strategist at Brown Brothers Harriman in New York. "Euro/dollar broke through important key levels this week and the forex market will keep testing new highs on the pair in coming days."
In morning trading in New York, the InterContinental Exchange's dollar index <.DXY., a gauge of the greenback's performance against six other major currencies, was down 0.2 percent on the day at 76.68, having earlier traded down at 76.51, its lowest since late September 2008.
The euro was 0.1 percent up on the day at $1.4603 , and about 2.0 percent higher on the week.
Solid data out of China added to the view the global economy is on the road to recovery , while questions about the dollar's long-term value also added to the negative sentiment towards the currency.
A U.S. Treasury official on Friday said it makes sense for China to diversify its huge stockpile of foreign exchange reserves, which analysts said fed the bearish dollar sentiment that has firmly taken hold this week. .
The dollar was down 0.9 percent on the day against the yen at 90.91 yen , having hit a seven-month low earlier of 90.69 yen, according to Reuters data, while the yen also gained versus the euro, which fell 0.8 percent to 132.68 yen .
YEN, RESERVE DIVERSIFICATION
Some analysts said yen strength may reflect the repatriation of profits by Japanese exporters ahead of the end of the first half of the Japanese fiscal year.
They also noted the focus in times of strong risk appetite may now be firmly on selling the dollar, rather than on selling of currencies such as the yen and the Swiss franc which were previously seen as the funding units of choice in carry trades.
In carry trades investors borrow in low-yielding currencies to finance purchases of higher-yielding assets.
"The yen has been surprisingly strong," said Thin at Brown Brothers. "Repatriation and some dollar-funded carry trades may be contributing to its gains."
Sterling rose 0.3 percent to $1.6695, just below a one-month high of $1.6742 , while the Australian dollar gained 0.1 percent to $0.8642 .
Concerns about central bank reserve diversification returned on Friday after Russia's central bank first deputy chairman Alexei Ulyukayev told Reuters the central bank would like to diversify its basket of forex reserve currencies by adding two or three more.