Yen Rises Against Euro

The yen rose versus the euro for the first time in three days as reports in Europe showed the global economic slump is deepening, fueling demand for the Japanese currency as protection against losses on higher-risk assets.

The yen also advanced against the dollar after a ZEW index in Germany showed investors became more pessimistic about current economic conditions. The British pound tumbled against the dollar and the euro as U.K. home sales fell to the lowest level since at least 1978 and factory production dropped almost three times as much as economists forecast in October, extending the country’s worst contraction since 1980.

The yen appreciated to 119.13 per euro at 7:17 a.m. in New York, from 120.26 yesterday. Against the dollar, the yen strengthened to 92.63 from 92.82. Japan’s currency may trade at 90 against the dollar by the end of the year, Hardman said. The euro slid to $1.2862 from $1.2963. The pound fell to $1.4772 from $1.4915, and to 136.83 yen from 138.41.

Australia’s dollar fell 1.4 percent to 65.54 U.S. cents. It also slid 1.6 percent to 60.71 yen. National Australia Bank Ltd. said its sentiment index for November fell one point to minus 30, the lowest level since the series began in 1989.

The dollar declined against the yen amid speculation a housing slump will extend into a fourth year. An index of U.S. pending home resales fell 3 percent after dropping 4.6 percent in September, according to the median forecast in a Bloomberg News survey of 34 economists. The National Association of Realtors will release the data at 10 a.m. in Washington today.

The yen rose 15 percent against the dollar and 26 percent against the euro this quarter on concern the U.S. economy is in its longest slump since World War II. The European Central Bank made the single deepest cut in its benchmark interest rate in history on Dec. 4.

The euro fell against the dollar today as the ZEW Center for European Economic Research in Mannheim said investors became more pessimistic about current conditions, with an index of sentiment slumping to minus 64.5 from minus 50.4. German investor confidence unexpectedly rose in December, a separate index showed.

The pound fell after the Office for National Statistics said today in London that factory production slid 1.4 percent, the eighth monthly drop and the longest streak of declines since the 1980 recession, when Margaret Thatcher was prime minister.,
12/9/2008 5:48:05 AM