By Stanley White Oct. 16 (Bloomberg) -- The yen fell against the dollar and the euro, reversing earlier gains, after Japanese Prime Minister Taro Aso called on the U.S. to step up support for banks to bolster confidence in the financial system. The Bush administration said this week it plans to spend $250 billion buying stakes in thousands of financial firms to halt a credit freeze that's sparked a global stocks rout. Turmoil in financial markets helped drive the yen to a seven- month high versus the dollar last week as investors dumped higher-yielding assets financed with loans in Japan, where borrowing costs are the lowest among major economies. ``There's a sense that the U.S. may have to do more to address this crisis,'' said Kengo Suzuki, currency strategist at Shinko Securities Co. in Tokyo. ``This contributed to a gain in the dollar and a decline in the yen.'' The yen fell to 100.20 against the U.S. currency as of 12:16 p.m. in Tokyo, from 99.96 late yesterday in New York. It earlier reached as high as 99.27. Japan's currency was at 135.24 per euro from 134.93 yesterday, after climbing to 133.38. The dollar traded at $1.3495 per euro, from $1.3499. ``People think the $250 billion plan is insufficient and that's why markets are falling,'' Aso told lawmakers in parliament in Tokyo today. ``Looking at Japan's experience from 1997 to 1998, unless you take action quickly, you end up paying a higher price,'' he added, referring to the nation's own bank bailouts of a decade ago. Carry Trades Against the Australian dollar, the yen pared its gains to a 6.9 percent rise from late yesterday in Asia to 67.06. It earlier rose as much as 11 percent. Japan's currency also traded at 61.23 per New Zealand dollar, off a session high of 58.93. Japan's currency rebounded on speculation investors will return to carry trades, in which they get funds in a country with low borrowing costs and buy assets where returns are higher. Japan's 0.5 percent benchmark rate compares with 6 percent in Australia and 7.5 percent in New Zealand. The won fell as much as 12 percent to 1,399.95 per dollar after Standard & Poor's said it may cut the credit ratings of Kookmin Bank and six other Korean financial companies on concern they will have difficulty refinancing maturing debts. That's the biggest drop since South Korea was bailed out by the International Monetary Fund in December 1997. To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net

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