July 23 (Bloomberg) -- The euro fell against the dollar and yen on concern stress-test results today will reveal loan losses at European banks, reducing demand for the region’s assets. Europe’s currency dropped against 13 of its 16 major counterparts on concern the findings will force the region’s banks to raise funds to bolster their balance sheets. The yen pared earlier losses on speculation Japan’s exporters bought the currency. South Korea’s won rose for a fourth day before a central bank report next week forecast to show the economy grew for a sixth-straight quarter. “The stress tests won’t deliver a perfect score,” said Daisuke Karakama, a market economist at Mizuho Corporate Bank Ltd., Japan’s second-largest publicly traded lender in Tokyo. “I’m betting the results will revive negative sentiment about the euro.” The euro fell to $1.2866 at 6:52 a.m. in London from $1.2893 in New York yesterday, set for a 0.5 percent weekly loss. It dropped to 111.84 yen from 112.10. The yen traded at 86.90 per dollar from 86.95, after earlier falling to as low as 87.24. The won advanced 0.5 percent to 1,197.95 per dollar, and was poised for a 0.4 percent gain since July 16. European regulators are scrutinizing banks to assess if they have enough capital, defined as a Tier 1 capital ratio of at least 6 percent, to withstand a recession and sovereign debt crisis, according to a document from the Committee of European Banking Supervisors. Lenders that fail the trials will be made to raise additional capital. The results will be published by CEBS and national regulators from 6 p.m. Brussels time today. Banks’ Breakdowns Europe’s shared currency has declined 8.3 percent this year, the biggest loss among its developed-world counterparts, according to Bloomberg Correlation-Weighted Indexes. The dollar has gained 3.3 percent, and the yen has advanced 12 percent. The yen trimmed this week’s drop to 0.3 percent against the dollar on speculation Japanese exporters purchased the currency. Japan’s large manufacturers expect the yen to average 90.16 against the U.S. currency in the six months to March 2011, according to Bank of Japan’s Tankan survey released July 1. “There’s talk that exporters are buying the yen,” said Masato Mori, a senior manager at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp. “In Tokyo time, the market is sensitive to capital flows from Japanese firms.” South Korea “Any currency belonging to a country with rising growth is attractive relative to the U.S. dollar,” said Douglas Borthwick, Connecticut-based managing director and trading head at Faros Trading LLC. Korea’s economy “has been expanding and causing inflationary fears in Asia, pushing interest rates higher.” Asia’s fourth-largest economy will expand 5.9 percent this year after having grown 0.2 percent in 2009, the Bank of Korea said on July 12.

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