By Anchalee Worrachate June 7 (Bloomberg) -- The yen rose against the Australian and New Zealand dollars as losses in stocks and concern Europe’s sovereign-debt crisis will slow the global economic recovery encouraged demand for a refuge. Japan’s currency touched an eight-year high versus the euro after a report showed last week that U.S. employers hired fewer workers in May than forecast and officials in Hungary compared their country to Greece, claiming the previous administration lied about public finances. The MSCI World Index of shares fell 0.8 percent today. “Risk aversion remains the underlying theme for the market, and that provides support for the yen,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “People are worried about signs of economic slowdown. These are not conditions that are favorable to risk- seeking activities.” The yen traded at 110.10 per euro at 7:30 a.m. in New York, compared with 109.98 on June 4, after reaching 108.08, the strongest level since November 2001. Japan’s currency fetched 91.94 per dollar, compared with 91.90. The euro traded at $1.1971, compared with $1.1967, after touching $1.1877, the lowest level since March 2006. A government report June 4 showed U.S. payrolls rose by 431,000 last month, compared with the median forecast for a 536,000 gain in a Bloomberg News survey. U.S. Retail U.S. retail sales growth slowed in May to 0.2 percent after a 0.4 percent gain in the previous month, according to economists in a separate Bloomberg News survey. The Commerce Department reports the data on June 11. Japan’s currency advanced for a second day versus the Australian dollar as investors sold higher-yielding assets on European debt concern and speculation China’s efforts to curb asset prices will weigh on growth. Consumer prices in China probably climbed in May at the fastest pace since October 2008, a report next week is forecast to show, according to a Bloomberg News survey. “In addition to the existing debate about whether China will successfully cool its overheating economy without a slump in growth, we now have the uncertainty about the fallout for the rest of the world from Europe’s debt problems,” said John Kyriakopoulos, head of currency strategy at National Australia Bank Ltd. in Sydney. Australia’s currency slid 0.5 percent to 75.28 yen, while New Zealand’s dollar decreased 0.4 percent to 61.38 yen. Kan on Yen Gains in Japan’s currency will likely be limited on speculation Prime Minister Naoto Kan may favor a weaker currency, said Richard Grace, chief currency strategist in Sydney at Commonwealth Bank. Kan said on Jan. 7, his first day as finance minister, that he wanted the yen to fall “a bit more” and pledged to monitor its level. Kan, who is succeeding Yukio Hatoyama, takes office just weeks before the government is due to say how it intends to reduce public debt and release a strategy to sustain a nominal 3 percent growth rate over the next decade, a pace unseen since 1991. “There’s probably a limit to how much the yen will strengthen given that it has its own sovereign issues to deal with and the government is likely to be endorsing a weaker yen in order to meet its growth targets,” Grace said. The euro’s 21 percent tumble from last year’s high has left the currency above the average level since its creation in 1999 and stronger than its predecessor, the deutsche mark. Even as the euro weakened 2.5 percent last week against the dollar and fell below $1.20 for the first time since March 2006, it remains higher than the close of $1.1837 on Jan. 4, 1999, the first Monday of trading after its introduction, and stronger than the $1.1842 monthly average since inception. A Bloomberg composite of the currencies comprising the euro averaged $1.1945 through last week from the end of 1988, when Europe’s foreign- exchange market was dominated by the German mark. To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net

Source