The yen gained versus the dollar, reaching the strongest level in more than a week, as the Bank of Japan (8301)’s second round of easing in two months disappointed some investors expecting more. The BOJ expanded its asset-purchase program by 11 trillion yen ($138 billion) to 66 trillion yen, the central bank said after a policy meeting today. The range of forecasts in a Bloomberg survey was from 10 trillion yen to 20 trillion yen. Demand for the yen as a refuge asset increased as Sandy, the largest tropical storm system on record, ravaged the American Northeast coast. The pound rose against the dollar before a report forecast to show U.K. retail sales rose. “The 10 trillion-yen increase was seen as a minimum expansion, and the failure to reach 15 trillion yen is very disappointing for markets,� said Yunosuke Ikeda, head of Japan foreign-exchange research at Nomura Securities Co. in Tokyo. “The yen is being bought as risk sentiment is worsening in part because of Sandy.� The Japanese currency strengthened 0.5 percent to 79.41 per dollar as of 9:05 a.m. London time, after reaching 79.28, the strongest since Oct. 22. The yen appreciated 0.2 percent to 102.74 per euro. Europe’s common currency climbed 0.3 percent to $1.2936. U.S. stock trading will be canceled for a second day after Sandy made landfall in New Jersey. The storm froze travel, spurred evacuations and may potentially affect 60 million people. Inflation Target Fifteen analysts expected the BOJ to add 10 trillion yen to its 55 trillion yen program that buys assets such as government bonds, real estate investment trusts and stock funds, according to a Bloomberg News survey. Four economists saw it increasing purchases by as much as 20 trillion yen. “We’re in a ‘buy the rumor, sell the fact’ move for the yen at the moment,� said Greg Gibbs, a senior currency strategist at Royal Bank of Scotland Group Plc in Singapore. Japan’s industrial production slid 4.1 percent in September from the previous month, the most since last year’s earthquake and tsunami in March, government data showed today. The drop exceeded the most pessimistic estimate of economists surveyed by Bloomberg. Nissan Motor Co. Chief Executive Officer Carlos Ghosn said his company may have to move away from Japan to survive as the strong yen diminishes the nation’s competitiveness. “If the exchange rate is high, we move out,� Ghosn said in Tokyo today. The yen’s “neutral range� is 100 to the dollar, he said. ‘Aggressive’ Policy “You really do need a much more aggressive monetary policy to try to get the yen weaker, to try to offer a bit of relief to the manufacturing sector,� Richard Jerram, chief economist at Bank of Singapore Ltd. said in an interview on Bloomberg Television. “The yen will be down at 88 in a year’s time against the dollar as a result of the more aggressive monetary policy coming out of the BOJ.� The euro pared gains after a report showed German unemployment climbed twice as much as analysts forecast in October. The number of people out of work rose a seasonally adjusted 20,000 from September to 2.94 million, the Federal Labor Agency in Nuremberg said today. Economists forecast a gain of 10,000, the median of 31 estimates in a Bloomberg News survey showed. A report today showed Spain’s economy contracted for a fifth quarter in the three months through September. Separate data may confirm an earlier reading on euro-area consumer confidence that was near a three-year low. In the U.K. a gauge of retail sales compiled by the Confederation of British Industry climbed to 8 in October from 6 a month earlier, according to the median forecast of 10 analysts in a Bloomberg survey. The report is scheduled for release at 11 a.m. London time. Sterling rose 0.2 percent to $1.6061. It was little changed at 80.53 pence per euro. To contact the reporter on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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