By Yasuhiko Seki and Ron Harui May 6 (Bloomberg) -- The pound traded near a nine-month high against the euro on concern Greece’s debt crisis will spread through the 16-nation region after Moody’s Investors Service said Portugal’s credit rating may be cut. The U.K. currency gained for the first time in three days versus the yen on speculation a U.K. index of service companies rose in April. The euro halted a three-day decline after a technical chart signaled its slump was overdone. New Zealand’s dollar surged after the nation’s jobless rate fell the most since at least 1986 and central bank Governor Alan Bollard said the nation’s economy was “less fragile.” “The pound is now considered to be a safe-haven currency from the euro zone, which is suffering from concerns over a contagion of sovereign problems,” said Toshiya Yamauchi, a senior foreign-exchange analyst at Ueda Harlow Ltd. in Tokyo. “The recent set of solid economic data add to the safe-haven status.” The pound advanced to 84.77 pence per euro, the highest since Aug. 6, 2009, before trading at 84.89 at 6:30 a.m. in London from 84.86 in New York yesterday. The U.K. currency climbed to 141.71 yen from 141.67. The yen was at 93.82 per dollar from 93.81, and fell to 120.28 per euro from 120.22. The euro rose to $1.2821 from $1.2814, after earlier falling to $1.2789, the weakest since March 12, 2009. Safe Haven The U.K. is a “safe haven” for investors shunning the debt of Greece and other European nations because of the perception that Britain’s next government will cut the record budget deficit, Roger Bootle, founder of Capital Economics Ltd. and a former adviser to the British Treasury, said yesterday. “The U.K. is, relative to them, a sort of safe haven,” Bootle said in London. “It’s because of a long history of paying back our debts and I think a belief in the market that we will get to grips with this.” Moody’s placed its Aa2 rating for Portugal on review for a possible downgrade, a process that will conclude within three months, the company said in a statement yesterday. Portugal has held the third-highest Moody’s investment grade since 1998. The U.K. service sector gauge, based on a poll of about 700 companies, climbed to 57 last month from 56.5 in March, according to a Bloomberg News survey of economists. Markit Economics and the Chartered Institute of Purchasing and Supply are scheduled to release the data today. Hung Parliament The U.K. currency has risen 3.8 percent against the Group of 10 currencies from this year’s low on March 10, according to Bloomberg correlation-weighted indexes. The yield on the 10- year gilt dropped yesterday to the lowest level since December. The pound pared gains on speculation today’s general election will produce a hung government unable to restrain the nation’s deficit. A ComRes Ltd. daily poll shows 37 percent of respondents plan to vote Conservative, 29 percent back Labour and 26 percent endorse the Liberal Democrats. That would give the Conservatives 294 seats, 32 short of a majority, ComRes said. A YouGov Plc survey gave 35 percent support to the Conservatives and 30 percent to Labour, up 2 points. The Liberal Democrats slipped 4 points to 24 percent. The euro reversed losses as its 14-day relative strength index against the greenback, a comparison of magnitudes of gains and losses, was at 26.5 yesterday and 27.1 today, below the 30 threshold that indicates an asset’s price has fallen too quickly. ‘Extremely Oversold’ “The euro is getting extremely oversold,” Puru Saxena, chief executive officer in Hong Kong at Puru Saxena Wealth Management, which oversees $300 million, said in an interview with Bloomberg Television. “At the moment, the short positions are at record levels, so it won’t take much for a sharp rally to occur in the euro.” The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain -- so-called net shorts -- was 89,013 on April 27, compared with 71,424 a week earlier, data from the Washington-based Commodity Futures Trading Commission show. New Zealand’s currency strengthened after government data showed the unemployment rate plunged to 6 percent in the first quarter from 7.1 percent in the previous three months, raising expectations the central bank will lift interest rates from a record low. “Financial markets currently expect the Reserve Bank to begin raising the official cash rate around the middle of the year and continue to do this in small steps for some time,” Bollard said in an e-mailed statement, based on a speech to local government officials in Dunedin today. “This is broadly in line with our current views.” Swaps Traders Swaps traders see a 98 percent chance of a quarter-point rate rise at the central bank’s June 10 review, according to a Credit Suisse AG index. “What the Reserve Bank is saying suggests they are more or less validating market pricing,” said Khoon Goh, a senior economist at ANZ National Bank Ltd. in Wellington. “The market pricing has pretty much a hike fully priced for June and 25 basis points of hikes at every meeting from then onward.” New Zealand’s dollar climbed to 72.61 U.S. cents from 71.72 in New York. To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

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