The dollar and the yen strengthened after a report showing the U.K. economy shrank more than forecast last year added to concern the global financial turmoil is deepening, stoking demand for the currencies as a refuge. The dollar also advanced against the euro after Europe’s statistics office said industrial orders in the region dropped the most on record in January. The yen gained against all 16 of the most-active currencies as Japanese companies brought home overseas earnings before the end of the nation’s fiscal year. “The market was somewhat taken aback by the downward revision in the U.K. growth numbers,” said Derek Halpenny, European head of global currency research at Bank of Tokyo- Mitsubishi UFJ Ltd. in London. “If anything, people were expecting an upward revision. That certainly added to the turnaround in the dollar.” The dollar appreciated to $1.3396 per euro as of 7:07 a.m. in New York, from $1.3526 yesterday, taking its advance this week to 1.4 percent. The yen strengthened to 131.37 per euro, from 133.52, paring its weekly decline to 0.8 percent. The dollar weakened to 98.10 yen from 98.71. The pound fell versus the dollar and the euro after Britain said gross domestic product declined a greater-than expected 1.6 percent in the fourth quarter, the biggest slump since 1980. It exceeded the prior measurement of 1.5 percent, which was also the median forecast of 27 economists in a Bloomberg survey. The U.K. currency weakened to $1.4307 from $1.4453, and to 93.79 pence per euro from 93.59 pence. European Slowdown Industrial orders in the euro area declined 34 percent from the year-earlier month, when they declined 24 percent, the European Union statistics office in Luxembourg said today. The January drop was the biggest since the data series started in 1996 and surpassed the 28 percent decline economists expected, according to the median of 10 estimates in a Bloomberg survey. From the prior month, January orders fell 3.4 percent. “There are plenty of event risks on the horizon that can dent investor sentiment,” said Ian Stannard, a currency strategist at BNP Paribas SA in London. “These have the potential to impact on the dollar.” The Dollar Index rose as U.S. stock-index futures slid and European equities reversed an earlier rally. The Dow Jones Stoxx 600, a benchmark for Europe, fell 0.6 percent, halting a six-day rally. Futures on the Standard & Poor’s 500 lost 0.9 percent. The Dollar Index, which the ICE uses to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, climbed 0.6 percent today to 84.704. Homeward Bound Demand for the yen was boosted on speculation Japanese companies and investors will repatriate earnings generated outside the nation before the fiscal year ends on March 31 “It’s quarterly and fiscal year-end, so there’s talk that Japanese life insurers and exporters will need to buy the yen,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “This is a last-minute kind of thing.” The yen still headed for a sixth weekly drop against the euro, the longest losing streak in eight months, as stocks rallied on optimism the worst of the global economic slump is over, sapping demand for the currency as a refuge.

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