By Gavin Finch and Ron Harui July 20 (Bloomberg) -- The yen and dollar fell against higher-yielding currencies as stocks gained on increased company earnings and CIT Group Inc. was said to be close to a $3 billion lifeline from bondholders. Japan’s currency dropped the most against the Australian and New Zealand dollars. The euro climbed to a six-week high against the dollar before a French report this week that may show consumer spending rebounded last month, signaling the worst of the global recession is over. The pound gained the most in more than a week versus the dollar as a report showed asking prices for U.K. homes increased this month. “The emergency loan for CIT obviously helped all risky assets, pushing up stock markets and risky currencies,” said Philipp Nimmermann, a currency strategist at BHF-Bank AG in Frankfurt. “It’s all stock-market-driven.” The yen weakened to 134.32 per euro at 8:40 a.m. in New York, from 132.85 last week, after earlier trading at 134.76, the lowest level since July 3. The dollar slid 0.9 percent to $1.4223 per euro, after earlier declining to $1.4248, the weakest level since June 5, from $1.4102. Japan’s currency slid 0.3 percent to 94.45 versus the dollar from 94.19. CIT’s board is scheduled to meet today to discuss the bridge-financing offer, which would give the company time to restructure its debt outside of bankruptcy, according to a person briefed on the firm’s deliberations. “The news has led to a rally in risk,” analysts led by David Woo, London-based global head of foreign-exchange strategy at Barclays Capital, wrote in a research note today. “We will remain long carry for the week ahead,” referring to bets on higher-yielding currencies. Yen Versus Majors The yen weakened versus all 16 major currencies before the U.S. Conference Board releases its index of leading economic indicators today. The gauge, which points to the direction of the world’s largest economy over the next three to six months, rose 0.5 percent in June, after a 1.2 percent increase in May, according to a Bloomberg survey of economists. Higher-yielding currencies advanced as stocks rose for a sixth day. The MSCI World Index of shares climbed 0.9 percent. The New Zealand dollar strengthened 1.4 percent to 65.36 U.S. cents and advanced 1.6 percent to 61.74 yen. Australia’s dollar rose 1.1 percent to 81.15 cents and gained 1.4 percent to 76.66 yen. Benchmark interest rates are 2.5 percent in New Zealand and 3 percent in Australia, compared with 0.1 percent in Japan and as a low as zero in the U.S. ‘Push Higher’ “We’re looking for a risk rally this week,” Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London, wrote in a note to clients today. “The yen should remain on the back burner whilst Australian and New Zealand dollars should produce higher price action.” The yen and dollar also weakened before U.S. companies such as State Street Corp. report their earnings this week. Standard & Poor’s 500 firms that have announced results since July 8 topped estimates by 16 percent, according to data compiled by Bloomberg. Thirty out of 38 beat projections. The Dollar Index fell to a six-week low on speculation New York-based CIT will reach a deal with bondholders to secure $3 billion in financing and avoid collapse. The company said last week it would probably fail to get a second federal bailout following a $2.33 billion loan in December. The Dollar Index, which the ICE uses to track the currency against those of six major U.S. trading partners, fell 0.5 percent to 78.919. It dropped to 78.799 earlier, the lowest level since June 3. House Prices The pound rose against the dollar and the yen after Rightmove Plc, the operator of the U.K.’s biggest residential property Web site, said the average costs of a British home increased 0.6 percent this month, after falling 0.4 percent in June. The British currency climbed 1.1 percent to $1.6518, and 1.5 percent to 156.12 yen. The euro climbed before a French report that economists expect to show consumer spending climbed 0.3 percent in June from the previous month, when it fell 0.2 percent. The national statistics office will publish the report on July 22. Futures traders increased bets to the highest level in five months that the yen will strengthen against the dollar, figures from the Washington-based Commodity Futures Trading Commission showed on July 17. The difference in the number of wagers by hedge funds and other large speculators on a gain in the yen compared with those on a drop -- so-called net longs -- reached 33,567 on July 14, the most since February, versus net longs of 17,117 a week earlier. The figures are sometimes used as a contrary indicator. To contact the reporters on this story: Gavin Finch in London at gfinch@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

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