July 27 (Bloomberg) -- The yen and Swiss franc weakened against most of their major counterparts as evidence that the world's largest economies are recovering supported demand for higher-yielding assets. The euro advanced to a seven-week high against the yen after a report showed German consumer confidence will rise in August and figures indicated yesterday that U.S. new home sales increased in June from a record low. The Swiss franc fell to the lowest level in more than a month versus the euro as stocks in Europe advanced. "It's pretty much risk-on in the markets," said Boris Schlossberg, director of research at the online currency trader GFT Forex in New York. "The upside surprises all continue this whole trend of positive economic news." The yen depreciated 1.1 percent to 114.09 per euro at 8:40 a.m. in New York, from 112.89 yesterday, after reaching 114.14, the weakest level since June 3. The yen slid 0.8 percent to 87.54 per dollar, from 86.88, after touching 86.27 on July 16, the strongest level since Dec. 1. The dollar lost 0.3 percent to $1.3030 per euro, from $1.2994, after reaching $1.3046, the weakest level since May 10. UBS AG, Switzerland's biggest bank, and Deutsche Bank AG, Germany's largest, reported second-quarter profits that surpassed analysts' estimates, driving the Stoxx Europe 600 Index up 0.7 percent. Futures on the Standard & Poor's 500 Index rose 0.6 percent. Weaker Franc The Swiss franc depreciated 1.1 percent to 1.3775 per euro, from 1.3625, after declining to 1.3795, the weakest level since June 21. "The sell-off in the franc today is purely a function of increased risk appetite," said Christian Lawrence, a foreign- exchange strategist at Royal Bank of Canada in London. "Risk is better, and we're seeing shares gain across the board." A German consumer sentiment index based on a survey of 2,000 people will climb to 3.9 in August from a revised 3.6 this month, the Nuremberg-based market research company GfK AG said in a statement today. The median forecast of 25 estimates in a Bloomberg News survey was for the index to remain unchanged at July's initial reading of 3.5. Purchases of new homes in the U.S. increased 24 percent in June to an annual pace of 330,000, the Commerce Department reported yesterday. The rate was the second-lowest in data going back to 1963 after May's downwardly revised 267,000 pace. The Conference Board's index of consumer confidence dropped to 51 this month from 52.9 in June, according to the median estimate of 73 economists in a Bloomberg News survey. The report is due at 10 a.m. in New York. Plosser on Stimulus Federal Reserve Bank of Philadelphia President Charles Plosser said it's too soon for the central bank to bolster record U.S. monetary stimulus in response to slower-than- forecast gains in economic growth and employment. "Talk of new efforts to stimulate the economy are premature right now," Plosser said yesterday in an interview with Bloomberg News in Washington. "I don't think the data have been sufficiently compelling one way or another." Japanese Finance Minister Yoshihiko Noda refrained from commenting on the yen's strength today in a departure from his predecessor's attempts to curb volatility by speaking about movements in foreign-exchange markets. When asked by reporters today about the currency, which has hovered at almost a seven-month high against the dollar since the European bank stress tests, Noda declined to comment other than to say that investors welcomed the results of the examination. View on Yen Noda's colleagues have expressed concern about the currency's advance, with Trade Minister Masayuki Naoshima saying last week the gain poses a risk to growth. Japan's large manufacturers expect the yen to average 90.16 against the dollar in the six months to March 2011, according to the Bank of Japan's Tankan survey released July 1. Australia's dollar held above 90 U.S. cents and New Zealand's was near its strongest level since January on expectations both economies are gaining momentum. The statistics bureau of Australia is forecast to report tomorrow that consumer prices increased in the second quarter at the quickest pace since September 2009. New Zealand's central bank will raise borrowing costs on July 29, according to a Bloomberg survey of economists. "The risk to the Australian and New Zealand dollars is for further strength in the short term," said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. Australia's dollar advanced 0.4 percent to 90.62 U.S. cents after reaching 90.69 cents, the highest level since May 10. New Zealand's dollar gained 0.6 percent to 73.85 cents after reaching 73.97, the highest level since Jan. 19. --With assistance from Yoshiaki Nohara in Tokyo. Editors: Dennis Fitzgerald, Greg Storey

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