July 13 (Bloomberg) -- The Australian dollar fell for a second day and New Zealand's weakened before a Chinese report that economists said will show growth in Asia's second-largest economy is slowing, damping demand for higher-yielding assets. Australia's currency also dropped from near a three-week high against the greenback after business confidence declined to the lowest in a year last month. The decline in New Zealand's dollar was tempered on speculation a government report this week will show consumer prices advanced for a second quarter. "Markets seem to be looking for an adjustment in Chinese growth and we're seeing a bit of profit-taking in the Aussie leading into those announcements," said Jim Vrondas, a manager at the online foreign-exchange dealer OzForex Ltd. in Sydney. "The Aussie is running out of momentum" and we could see more declines this week, he said. Australia's currency fell to 86.98 U.S. cents as of 4:43 p.m. in Sydney from 87.59 cents in New York yesterday, when it rose to 87.93 cents, the strongest since June 22. The currency declined 0.6 percent to 77.14 yen. New Zealand's dollar dropped 0.3 percent to 70.93 U.S. cents, after earlier climbing to 71.37 cents, the strongest level since June 28. It weakened 0.3 percent to 62.91 yen. The MSCI Asia Pacific Index of shares slid 0.6 percent and China's Shanghai Composite Index fell 1.6 percent, the biggest drop in two weeks, as the government reiterated it will maintain curbs on property purchases it considers to be speculative. China Growth China's gross domestic product expanded 10.5 percent last quarter, down from 11.9 percent in the previous three months, according to a Bloomberg News survey before the statistics bureau's July 15 report. Australia's dollar weakened versus most of the major currencies after a National Australia Bank Ltd. survey showed its business confidence index declined to 4 in June from 5 the prior month. "Financial markets remained choppy during the survey period as in May, with ongoing concerns about European sovereign debt and the global outlook," said Alan Oster, chief economist at National Australia Bank in Melbourne. Losses in the New Zealand dollar were limited before the July 16 inflation report. Consumer prices rose 0.4 percent last quarter from the prior three months, and 1.9 percent from a year earlier, according to a Bloomberg survey. New Zealand's food prices climbed 1.3 percent in June from May, when they fell 0.7 percent, a report showed today. Rate Outlook Reserve Bank of New Zealand Governor Alan Bollard will raise interest rates by 1.34 percentage points over the next 12 months, according to a Credit Suisse AG index based on swaps. Benchmark rates are 4.5 percent in Australia and 2.75 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors to the South Pacific nations' higher-yielding assets. The risk in such trades is that currency market moves will erase profits. Australian bond futures were little changed with the implied yield on the 10-year contract for September delivery at 5.105 percent. New Zealand's two-year swap rate, a fixed payment made to receive floating rates declined two basis points to 4.23 percent. --With assistance from Jacob Greber in Sydney. Editors: Nicholas Reynolds, Garfield Reynolds

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