The yen and the dollar advanced against higher-yielding currencies as Asian stocks extended a worldwide decline, increasing demand for a refuge from the global financial turmoil. The yen rose versus all 16 of the most-active currencies as the MSCI Asia Pacific index of equities slid for a second day on renewed concern the recession will hurt corporate earnings. The Australian and New Zealand dollars weakened as a gauge of shipping costs fell for a 20th day, the longest stretch of losses in five months, signaling weaker demand for commodities that account for the majority of the nations’ exports. “We need to assess reality once again during the earnings season to see if the recent optimism can be justified,” said Shigeru Nakane, a foreign-exchange dealer in Tokyo at Resona Bank Ltd., a unit of Japan’s fourth-largest banking group. “Caution ahead of the reporting may trigger selling” of stocks and boost demand for the dollar and the yen, he said. The yen climbed to 131.98 versus the euro as of 6:06 a.m. in London from 133.29 in New York yesterday. The dollar rose to $1.3177 per euro from $1.3272 after touching $1.3177, the strongest level since April 1. Japan’s currency advanced to 100.09 versus the dollar from 100.42. It earlier reached 99.89. Australia’s dollar dropped 0.5 percent to 70.72 U.S. cents and New Zealand’s dollar fell 0.5 percent to 57.27 U.S. cents as the Baltic Dry Index, a measure of raw-material shipping cost, extended its decline to the longest since November. Stocks Decline The MSCI Asia Pacific index dropped 2.8 percent and the Nikkei fell 3.1 percent. Profits at companies in the Standard & Poor’s 500 Index may have fallen 37 percent in the first quarter, according to estimates from more than 1,700 securities analysts compiled by Bloomberg. Alcoa Inc., the first Dow Jones Industrial Average company to post results for the March quarter, reported a larger-than-estimated loss. “The risk associated with results of U.S. companies is causing a risk aversion bid into the yen,” said Susumu Kato, chief economist in Tokyo at Calyon Securities, the investment banking unit of Credit Agricole SA. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, climbed for a third day, rising to 85.523 from 85.288. “With the basis for the recent euphoria about the global economy and stock markets still looking to be fragile, I want to take profits on recent gains before major events in the U.S. such as corporate profit announcements,” said Takashi Kudo, director of foreign-exchange sales in Tokyo at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp. Possible Bankruptcy The yen rose for a second day against the dollar, the first back-to-back gain in almost three weeks, on speculation General Motors Corp. is speeding up preparations for a possible bankruptcy filing. “The potential collapse of GM is definitely negative for the dollar,” said Kengo Suzuki, a currency strategist in Tokyo at Shinko Securities Co., a unit of Japan’s second-largest banking group. GM will focus on forming a new company from its best assets if court protection is needed, according to people familiar with the plans who asked not to be named because the details aren’t public. The moves are a response to President Barack Obama’s March 30 rejection of the company’s bid to keep $13.4 billion in federal loans. ‘Bad Shape’ Gains in the yen may be tempered before a government report tomorrow that economists say will show machinery orders declined for a fifth month. Machinery orders, an indicator of capital investment in the next three to six months, dropped 6.9 percent in February from the previous month, according to a Bloomberg News survey before the release of the statistics bureau report. “Japan’s economy is in bad shape,” said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany’s second-largest lender. “There is no reason to buy the yen right now.” Japan’s current-account surplus narrowed in February as the recession eroded demand for the nation’s exports. The surplus shrank 55.6 percent to 1.117 trillion yen ($11 billion) from a year earlier, the Ministry of Finance said today. Japan had a 172.8 billion yen deficit in January, its first in 13 years. German Exports The euro fell for a third day against the dollar before a report that may show German exports dropped for a fifth straight month in February, pushing Europe’s largest economy deeper into a recession. Sales abroad, adjusted for working days and seasonal changes, fell 4.4 percent from January, when they slipped 4.4 percent, according to a Bloomberg survey before the Federal Statistics Office releases the report today. “Given the severe state of the euro-zone economy and the fact that there are only limited policy tools left for the European Central Bank, a recovery there may lag behind the U.S. and Japan,” said Takeshi Makita, a Tokyo-based economist at Japan Research Institute Ltd., a unit of Sumitomo Mitsui Financial Group Inc., the nation’s third-largest banking company. The euro may fall back to below 130 yen, he said. The European Union’s statistics office said yesterday gross domestic product in the region declined 1.6 percent in the fourth quarter, the most in at least 13 years. The March 5 estimate was for a 1.5 percent contraction.

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