Sept. 6 (Bloomberg) -- New Zealand's dollar and its bonds fell, pushing up 10-year yields to the highest in more than a month, as the nation faces a NZ$2 billion ($1.4 billion) damage bill after a magnitude 7.0 earthquake over the weekend. The so-called kiwi dollar dropped against all 16 major counterparts after the Sept. 4 quake in Christchurch, the nation's second-biggest city, intensified concerns that policy makers will pause interest-rate increases to aid the economic recovery. Australia's dollar declined against 13 of its 16 major counterparts on speculation its central bank will keep the benchmark interest rate unchanged tomorrow. "The big reaction has been in the bond market, where we've seen quite a big sell-off," said Khoon Goh, head of market economics and strategy at ANZ National Bank Ltd. in Wellington. "The main concern is the impact on the government's finances in terms of funding the reconstruction cost with early estimates putting the cost at about NZ$2 billion." The yield on New Zealand's 6 percent bond due May 2021 rose 12 basis points to 5.41 percent at 12:03 p.m. in Wellington. It earlier touched 5.42 percent, the highest since July 28. A basis point is 0.01 percentage point. New Zealand's dollar fell to 71.96 U.S. cents from 72.07 cents in New York on Sept. 3. The kiwi was at 60.76 yen from 60.77 yen. Australia's dollar declined to 91.55 U.S. cents from 91.66 cents on Sept. 3, when it reached 91.76 cents, the highest since Aug. 9. The currency was at 77.33 yen from 77.28 yen. 'Rebuild Job' Aftershocks hit Christchurch yesterday and stormy weather placed "significant stress on already damaged buildings," the government said in a statement. "There's a major rebuild job here in Christchurch," New Zealand Prime Minister John Key said in a television interview yesterday. "You can see the superficial damage. A lot of homeowners will, over time, find damage that they're not expecting." The Reserve Bank of Australia is forecast to keep the benchmark interest rate at 4.5 percent for a fourth month tomorrow, according to all 25 economists in a Bloomberg News survey. Losses in the New Zealand and Australian dollars were limited as U.S. Labor Department figures on Sept. 3 showed payrolls that exclude government agencies climbed 67,000, after a revised 107,000 increase in July that was more than initially estimated. "The report immediately triggered a bout of risk seeking," Gareth Berry, a currency strategist in Singapore at UBS AG, wrote in a research note today. "The Australian, New Zealand and Canadian dollars all gained against the U.S. dollar." The Standard & Poor's 500 Index rose 1.3 percent and the Reuters/Jefferies CRB Index of raw materials rose 0.6 percent yesterday on Sept. 3. Australian government bonds fell. The yield on the 4.5 percent bond due April 2020 rose eight basis points to 4.92 percent, according to Bloomberg data. New Zealand's two-year swap rate, a fixed payment made to receive floating rates, dropped four basis points to 3.80 percent. --With assistance from Jason Scott in Perth and Tracy Withers in Auckland. Editors: Garfield Reynolds, Nate Hosoda.

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