The yen rose against most of its major counterparts as signs the global economic recovery is faltering boosted its appeal as a haven. Japan’s currency snapped a two-day losing streak against the dollar after a report showed the nation’s gross domestic product expanded at a slower-than-expected pace. The greenback slid against the euro on speculation last week’s 4 percent surge, the most since May, wasn’t justified given the outlook for economic growth in the U.S. The dollar also fell as data showed New York area manufacturing grew less than forecast. “We’re viewing it through a lens that everything is negative at this point,” said Andrew Busch, a global currency strategist at Bank of Montreal in Chicago. “It’s a view of slowing growth, a deflationary environment perhaps in which the yen strengthens in a risk-off scenario.” The yen gained 1.1 percent to 85.29 per dollar at 11:28 a.m. in New York, from 86.20 on Aug. 13. It touched 84.73 yen, the strongest in 15 years, on Aug. 11. Japan’s currency rose 0.4 percent to 109.52 per euro. The dollar fell 0.7 percent to $1.2842 per euro, from $1.2754, after reaching $1.2734, the strongest since July 21. Its 4 percent rally last week was the biggest since the period ended May 7. Japan’s economy expanded at an annualized 0.4 percent rate in the three months to June 30, according to government data released today. That compares with the median economist estimate for 2.3 percent growth in a Bloomberg News survey. ‘Risk Aversion’ “The resumption of very weak growth in Japan also suggests a moderation in global growth,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., world’s largest custodial bank, with more than $20 trillion in assets under administration. “It’s feeding into risk aversion.” The Federal Reserve Bank of New York’s general economic index rose to 7.1 this month from 5.1 in July, less than the reading of 8 forecast by economists in a Bloomberg News survey. Readings greater than zero signal expansion in the so-called Empire State Index. Builders in the U.S. unexpectedly turned pessimistic in August. The National Association of Home Builders/Wells Fargo confidence index dropped to 13 this month, the lowest level since March 2009, from 14 in July, data from the Washington- based group showed today. German Confidence Data tomorrow are forecast to show German investor confidence slid. The ZEW Center for European Economic Research’s index of German investor and analyst expectations, which aims to predict developments six months ahead, fell to 20 in August from 21.2 in July, a separate survey showed ahead of tomorrow’s data. The Swiss franc rose today against most major currencies as investors sought it as a refuge, gaining 0.5 percent to 1.3344 per euro, its fifth straight daily advance. The yen has strengthened 14 percent this year, the most among 10 developed-world currencies, Bloomberg Correlation- Weighted Currency Indices show. Its rally has fueled speculation the government may intervene to curb its appreciation. Central banks intervene in the foreign-exchange market when they buy or sell currencies to influence exchange rates. The Japanese currency may gain to 79 versus the dollar by the end of the year, according to JPMorgan Chase & Co. The company earlier predicted the currency would end the year at 93 against the greenback, Tohru Sasaki, chief foreign-exchange strategist in Tokyo, wrote in a report today. Eisuke Sakakibara, formerly Japan’s top currency official, said the yen may rise to a record against the dollar because of concern over the health of the U.S. economy. ‘Weakness of the Dollar’ “What we are seeing is not appreciation of the yen, but weakness of the dollar, reflecting concerns that the U.S. economy may falter,” Sakakibara said yesterday on the Fuji television network. “There is a chance the yen will reach an all-time high and stay at that level for the time being.” Lawmakers from Japan’s ruling party last week urged Prime Minister Naoto Kan to consider intervening in the currency market for the first time since 2004. They also called on the Bank of Japan to “engage in large-scale monetary easing.” The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major trading partners, fell for the first time in six days, dropping 0.7 percent to 82.397, from 82.948 on Aug. 13. Futures trading on the CME Group exchange showed an 11 percent chance the Fed will raise its target rate for overnight bank lending by at least a quarter-percentage point by its March meeting, down a from a 27 percent probability one month ago. “U.S. rates are going to be low, the U.S. looks to be in a low-growth recovery,” said Ray Farris, head of foreign-exchange strategy at Credit Suisse Group AG in London. “That’s going to be bad for the dollar.” Farris, speaking on Bloomberg Television’s “In the Loop With Betty Liu,” said the greenback will weaken in the next 6 to 12 months.

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