By Keith Jenkins and Ron Harui June 23 (Bloomberg) -- The euro traded near a one-week low versus the yen amid concern weakness in European manufacturing and the U.S. housing market will hamper the global recovery, triggering demand for Japan’s currency as a refuge. The yen rose against 15 of its 16 most-active counterparts ahead of reports today that are forecast to show European services and manufacturing industries slowed and new U.S. home sales slid by the most in 16 years. The dollar traded near a four-week low versus the yen on speculation the Federal Reserve will today express concern over the strength of the U.S. economy. The MSCI World Index of shares fell for a second day. “The medium-term picture for the euro is still bearish,” said Ian Stannard, a senior foreign-exchange strategist at BNP Paribas SA in London. “The recovery we’ve seen since the beginning of June has pretty much run out of steam. The yen benefits from some support on safe-haven demand.’ The euro traded at 110.88 yen at 7:47 a.m. in London from 111.14 in New York yesterday, after earlier slipping to 110.73, the lowest since June 11. The dollar was at 90.40 yen from 90.57 yen. The euro traded at $1.2274 from $1.2271 yesterday, after reaching $1.2245, the weakest since June 17. London-based Markit Economics will say today its composite index based on a survey of euro-area purchasing managers in services and manufacturing industries fell to 55.8 in June from 56.4 in May, according to a Bloomberg News survey of economists. European, U.S. Data The Commerce Department will say U.S. sales of new homes, tabulated on contract signings, fell 19 percent to an annual pace of 410,000 in May, a separate survey showed. The projected drop would be the biggest since January 1994. Existing home sales fell 2.2 percent in May, data by the National Association of Realtors showed yesterday. The yen typically strengthens in times of financial turmoil as Japan’s trade surplus makes the currency attractive as it means the nation doesn’t have to rely on overseas lenders. The dollar is set for a second daily decline against the yen before the Federal Open Market Committee ends a two-day meeting and releases a policy statement today. Policy makers will hold the benchmark rate at the record low range of zero to 0.25 percent today, a Bloomberg survey showed. “The focus should be on the statement’s assessment for the U.S. economy, given the latest drag on U.S. equities by disappointing U.S. residential property data,” Philip Wee, a senior currency economist in Singapore at DBS Group Holdings Ltd., wrote in a research note today. The Standard & Poor’s 500 Index slipped 1.6 percent and the Dow Jones Industrial Average declined 1.4 percent yesterday. European Banks The euro also fell after Credit Agricole SA said it will take a 400 million euro ($491 million) writedown on its stake in Emporiki Bank of Greece SA. Standard & Poor’s Ratings Services said in a report on June 21 that Spanish banks face “difficult years” in 2010 and 2011 as credit losses mount and revenue generation comes under “substantial strain.” “A wealth of worrying credit news is rekindling fears over the health of the European banking sector,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “This is weighing on the euro.” The British pound rose to a one-week high against the euro after U.K. Prime Minister David Cameron won the endorsement of bond investors and Fitch Ratings for the biggest budget squeeze in 50 years. Fitch on Britain Fitch yesterday said the “ambitious” plan ensured Britain would keep its AAA credit rating. The deficit cuts planned by Chancellor of the Exchequer George Osborne and measures proposed by the previous Labour government total 113 billion pounds ($167.5 billion), 15 percent of the 737 billion-pound budget foreseen for 2015, the Treasury said. “The pound was one of the first hit by quantitative monetary and expansionary fiscal policies that evoked the ire of rating agencies,” Greg Gibbs, a foreign-exchange strategist at Royal Bank of Scotland Group Plc in Sydney, wrote in a research note today. “The pound is expected to continue to outperform the euro and yen.” The U.K. currency advanced to 82.75 pence per euro from 82.83 pence yesterday, after earlier rising to 82.68 pence, the strongest since June 15. It was at $1.4837 from $1.4816 yesterday. To contact the reporters on this story: Keith Jenkins in London at Kjenkins3@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

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