By Stanley White Dec. 3 (Bloomberg) -- The yen fell for a second day against the euro on speculation interest-rate cuts worldwide will stem an economic slump, reducing the appeal of the Japanese currency as a safe haven. The yen also declined versus the Australian and New Zealand dollars as a rally in U.S. stocks spread to Asian shares, encouraging purchases of higher-yielding assets funded with currencies where interest rates are lower. The dollar fell against the euro before reports that will probably show U.S. companies accelerated job cuts and a contraction in services deepened. “Central-bank rate cuts could ease investors’ aversion to risk and lead to a weaker yen,” said Masanobu Ishikawa, manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “Traders may also take their cue from stock markets and purchase higher-yielding currencies.” The yen traded at 118.96 per euro at 1 p.m. in Tokyo from 118.44 late yesterday in New York, when it fell 0.8 percent. The yen was quoted at 93.42 against the dollar, compared with 93.18. The euro rose to $1.2730 from $1.2714. The yen may decline to 119 per euro today, Ishikawa said. Central bankers will lower interest rates by 1.5 percentage points to 5 percent in New Zealand, 1 percentage point to 2 percent in the U.K. and a half-percentage point to 2.75 percent in the euro region this week, according to the median forecasts of analysts surveyed by Bloomberg. Yen Versus Rand The yen depreciated 0.9 percent against the Australian dollar to 60.41 from late yesterday in New York. It also fell 0.2 percent to 49.64 versus the New Zealand dollar on speculation investors will slow the unwinding of carry trades, in which they get funds in a country with low borrowing costs and buy assets where returns are higher. The Bank of Japan kept its target lending rate at 0.3 percent yesterday, compared with 4.25 percent in Australia and 6.5 percent in New Zealand. The MSCI Asia-Pacific index of regional shares gained 1.3 percent, rebounding from its biggest decline in two weeks yesterday. The Standard & Poor’s 500 Index rose 4 percent yesterday, a day after the biggest rout since mid-October. Europe’s Dow Jones Stoxx 600 Index gained 1.7 percent. “We’re seeing tentative improvement in market sentiment,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York. “I don’t think this represents a new trend. The trend is continued difficulty for the global economy and financial markets, leading to further strength of the dollar and the yen.” ADP Employer Services may report today that companies in the U.S. cut 205,000 jobs last month, following a reduction of 157,000 in October, according to the median forecast of 22 economists surveyed by Bloomberg News. The report is due 8:15 a.m. New York time. Payroll Report Payrolls including government employees shrank by 325,000 workers in November, the biggest one-month drop since the 2001 terrorist attacks, according to the median forecast of economists before the Labor Department’s Dec. 5 report. Foreign-exchange funds had their biggest monthly returns in October since 2003 as investors sold higher-yielding assets and bought the U.S. dollar, Parker Global Strategies LLC said yesterday. Currency funds gained 2.53 percent, according to the Stamford, Connecticut-based firm, whose Parker FX Index tracks 68 firms managing more than $36 billion in assets. Federal Reserve Chairman Ben S. Bernanke said on Dec. 1 he may use less conventional policies, such as buying Treasury securities, to revive the economy because there is limited room to lower the target lending rate from the current 1 percent. To contact the reporters on this story: Stanley White in Tokyo at swhite28@bloomberg.net

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