The yen and the dollar weakened as advances in stocks curbed demand from investors seeking a refuge from the global financial turmoil. The Japanese currency fell the most versus the South Korean won and snapped two days of gains versus the dollar as the MSCI World Index climbed for the first time in four days and U.S. stock futures rose. The pound fell against the euro after U.K. housing sales fell to the lowest level since at least 1978. The euro approached a two-month high against the yen on speculation European investors will bring home overseas earnings before the end of the first quarter. “We’ve seen some stabilization so that has undermined the dollar and allowed the euro to make some gains,” said Daragh Maher, a London-based currency strategist at Calyon, the investment-banking arm of Credit Agricole SA. “There are many problems for the yen too. Nobody has been willing to aggressively buy the yen when we’re getting bad news on the economy.” The yen depreciated to 124.94 per euro as of 6:35 a.m. in New York from 124.65 in New York yesterday. The dollar weakened to $1.2707 per euro from $1.2611. The U.S. currency declined to 98.33 yen from 98.84. The yen slid against 14 of the 16 most actively traded currencies after a Cabinet Office report today showed the leading index of business conditions fell to 77.1 in January from 80 in December, below the consensus forecast of 77.4 in a Bloomberg News survey. The coincident index, which shows current economic activity, dropped to 89.6 from 92.4. Machine Orders Japanese machinery orders slumped 4.8 percent in January from December following a record decline of 16.7 percent in the last quarter of 2008 from the previous three months, according to a separate Bloomberg survey of economists before a Cabinet Office report tomorrow. “The incoming data is likely to illustrate the vulnerability of the Japanese economy,” said Takashi Matsumura, a Tokyo-based economist at Mizuho Research Institute Ltd., a unit of Japan’s second-largest banking group. “The weak data will be yen-negative.” Japan’s currency weakened 1.6 percent to 6.477 per won, 0.9 percent to 62.98 versus the Australian dollar and 0.6 percent to 49.00 against the New Zealand dollar. The Dollar Index, which the ICE uses to track the U.S. currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, fell 0.5 percent to 88.547. The index touched 89.624 on March 4, the highest level since April 2006. The MSCI World Index rose 0.7 percent and Standard & Poor’s 500 Index futures expiring this month climbed 2.2 percent. Pound Declines The pound weakened to 91.69 pence per euro and traded as low as 92.18, from 91.53 yesterday, after the Royal Institution of Chartered Surveyors said the average number of transactions in a survey of real-estate agents and surveyors fell to 9.5 per respondent in the quarter through February, the lowest level since the data began three decades ago. “The housing data was bad and we’re nervous about the economy,” said Jeremy Stretch, a senior currency strategist in London at Rabobank International. “Quantitative easing is about to begin, and all these factors tell us to stand aside and wait until it gets cheaper.” The euro pared this year’s loss to 9 percent against the dollar on speculation European investors bought the currency to repatriate income from abroad as they close their books before March 31. ‘Repatriating Funds’ “Investors in central and eastern Europe appear to be repatriating funds,” said Hideki Amikura, deputy general manager of foreign exchange in Tokyo at Nomura Trust and Banking Co., a unit of Japan’s largest brokerage. The euro may strengthen to $1.27 and 126.50 yen this week, according to Amikura. U.K. Chancellor of the Exchequer Alistair Darling called on the European Union to bolster a facility used to support nations facing financial difficulties, saying the EU must do more to help former communist states. “Our priority must be to support those countries most at risk from the aftershock of the global financial crisis, starting with those on our own doorstep in Europe,” Darling wrote in a letter published in the Guardian newspaper today. The Korean won rose 2.5 percent to 1,510.77 per dollar, according to Seoul Money Brokerage Services Ltd. The currency dropped 17 percent this year, after sliding 26 percent in 2008, and touched 1,597 on March 6, the lowest level since 1998. ‘Offshore Players’ “There are offshore players who are selling dollars for the won after an excessive overshoot in the exchange rate in recent weeks,” said Roh Sang Chil, a currency dealer with Kookmin Bank in Seoul. “Rising stocks are lending support to the currency market. From April, we’ll see the overall situation improving.” China should let the yuan rise 3 percent against the dollar in 2009 to deter capital outflows and help the country make overseas acquisitions, said Wang Jian, a researcher affiliated with the nation’s top planning agency. “A weaker currency will prompt massive amounts of foreign capital to flee the country,” said Wang, secretary general of the China Society of Macroeconomics, a Beijing-based research institute under the National Development and Reform Commission that advises the government. “It won’t help exports. Foreign consumers still won’t have enough money to buy.”

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