The dollar held a two-day drop against the euro as Asian stocks extended a rally in global equities, damping demand for the U.S. currency as a refuge. Australia’s dollar advanced for a third day versus the U.S. currency and the yen on higher prices for commodities, which make up majority of the nation’s exports. The euro declined earlier as Italy and Spain prepare to sell short-term debt amid a regional fiscal crisis. Demand for the greenback was limited before a report forecast to show U.S. consumer confidence stayed near the lowest level in two years. “Stock gains reduce risk-aversion pressure, driving down haven currencies like the dollar and yen,” said Kengo Suzuki, manager of the foreign-bond department in Tokyo at Mizuho Securities Co., a unit of Japan’s third-biggest listed bank. The dollar traded at $1.3549 per euro at 6:51 a.m. in London from $1.3533 yesterday in New York. It was at 76.34 yen from 76.36 yen. The 17-nation euro fetched 103.42 yen from 103.34 yen, after touching 101.94 yesterday, the least since June 2001. The Australian dollar advanced 0.6 percent to 98.94 U.S. cents while New Zealand’s currency rose 0.6 percent to 78.48 cents. The MSCI Asia Pacific Index of shares jumped 3.5 percent, following a 2.3 percent gain in the Standard & Poor’s 500 Index yesterday. Crude oil increased as much as 2.5 percent on the New York Mercantile Exchange and copper on the London Metal Exchange rallied as much as 2.6 percent. Debt Auctions The euro weakened earlier and is poised to complete its worst monthly decline against the yen in more than one year. Spain will today sell 175- and 77-day bills, while Italy is preparing to auction as much as 14.5 billion euros ($19.6 billion) of government debt. “Looking ahead into the European session, Spain will be auctioning bills,” Stewart Hall, a senior currency strategist in Toronto at RBC Dominion Securities Inc., wrote in a report today. “While this is not expected to be a seminal moment for markets it will remind market practitioners of the challenged issuance environment for the EU periphery.” The common currency has lost 6.1 percent against the yen this month, set for the sharpest decline since May 2010. U.S. Data The Conference Board’s U.S. consumer confidence index stood at 46 this month, according to the median estimate of economists surveyed by Bloomberg News before today’s report. The reading in August was 44.5, the weakest since April 2009. Commerce Department data showed yesterday that sales of new homes in the U.S. dropped 2.3 percent to a 295,000 annual pace last month, compared with the 293,000 estimated by economists. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, slid for a second day. The gauge sank 0.6 percent to 77.927, after a 0.2 percent drop yesterday. The yen has gained against its all 16 major counterparts this month, prompting concern Japan will intervene in the foreign-exchange market to halt its gain. Japanese Finance Minister Jun Azumi said today he’s ready to take bold action on currency if needed. He’ll closely monitor yen moves, he said. Japanese companies are “increasingly expressing their concern about the appreciation of the yen,” said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp., Australia’s second-largest lender said in an interview on Bloomberg Television. “Clearly the pressure on the Cabinet to do something and make some bold steps will increase in the days ahead, so the yen is another safe haven I’d be avoiding at the moment.” To contact the reporters on this story: Monami Yui in Tokyo at myui1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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