By Lukanyo Mnyanda and Stanley White Nov. 4 (Bloomberg) -- The yen rose against the Australian dollar and British pound as falling interest rates make it less attractive to buy overseas assets using funds from Japan. The currency gained as much as 3 percent versus the Australian dollar after the Reserve Bank of Australia lowered borrowing costs by three-quarters of a percentage point to 5.25 percent today. The euro advanced versus the dollar as stocks in the region reversed their declines. ``The yen is being supported by the narrowing yield differential with other markets,'' said Marcus Hettinger, a Zurich-based currency strategist at Credit Suisse Group. ``We're still in a risk-averse environment and that's supportive of the yen.'' The yen rose to 66.73 per Australian dollar at 8:54 a.m. in London, from 67.05 yesterday in New York. Japan's currency strengthened to 156.22 versus the pound from 156.84. It was little changed at 125.14 against the euro from 125.33, and traded at 98.94 per dollar from 99.12. The yen typically gains when investors become more averse to risk, causing them to reverse so-called carry trades. In such transactions, investors purchase higher-yielding assets with funds borrowed in nations with lower interest rates. Japan's key rate is 0.3 percent, the lowest among major economies. The Japanese currency may still trade at 100 per dollar in the ``next couple of weeks'' as risk appetite improves, Hettinger said. The euro advanced to $1.2670, from $1.2643 yesterday as Europe's Dow Jones Stoxx 600 Index rose for a sixth day, climbing 0.7 percent, the longest stretch of gains since 2007. To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net; Stanley White in Tokyo at swhite28@bloomberg.net

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