Aug. 19 (Bloomberg) -- The pound rose for a second day against the euro after reports showed British retail sales accelerated in July and the government posted a smaller deficit that economists forecast. The franc rose against 15 of the 16 major currencies after a report showed Switzerland’s trade surplus rose to a record in July, fanning speculation the Swiss National Bank may raise interest rates. The yen slid against all but one of its most- traded peers as rising stock markets reduced the demand for safer assets and on concern Japan will weaken the currency. “U.K. public finances are on track and retail sales aren’t collapsing,” said Geoffrey Yu, a currency strategist in London at UBS AG. “That gave the pound a bit of a boost but it’s a short-term move.” Sterling rose 0.4 percent to 82.11 pence per euro as of 7:48 a.m. in New York, while the franc also gained 0.4 percent, to 1.3347 per euro. The yen weakened to 85.53 per dollar from 85.46 and was little changed at 109.83 per euro. The dollar strengthened to $1.2839 per euro from $1.2853 yesterday. It reached $1.2734 on Aug. 16, the strongest level since July 21. The Stoxx Europe 600 Index rose 0.6 percent while futures for September delivery of the Standard & Poor’s 500 Stock Index gained 0.4 percent. ‘Pound Positive’ “It’s hard not to read today’s numbers as anything but pound positive as they will both soothe worries over a slowing U.K. recovery and large government deficit,” Paul Robson, a senior foreign-exchange strategist at Royal Bank of Scotland Group Plc in London, wrote in a note. “The focus now is whether the coalition government can hold together as it tries to cut spending.” The Swiss trade surplus widened to a record 2.89 billion francs ($2.77 billion) from 1.77 billion francs, the Federal Customs Office in Bern said in an e-mailed statement today. Imports, adjusted for seasonal swings and inflation, fell 4 percent from June, when they declined a revised 10.2 percent. Demand Recovery ‘Essential’ “A recovery in the external demand is essential to keep Switzerland’s rebound going and for the SNB to move toward a less expansionary policy,” said Kasper Kirkegaard, an analyst with Danske Bank A/S in Copenhagen. Switzerland’s central bank softened its stance on fighting franc gains at its June 17 meeting and said it can’t keep interest rates at a record low 0.25 percent in the medium term without fuelling inflation. The bank said the risks of deflation have “largely disappeared.” The yen weakened after Ministry of Finance data showed Japanese investors scooped up a net 2.17 trillion yen ($25.5 billion) in foreign bonds and notes, the most since the data began in 2001. The currency also lost ground on speculation authorities will act to temper further gains after the yen reached a 15-year high versus the dollar this month. Corporate Loans The Bank of Japan may increase the amount of a corporate loan program to 30 trillion yen from 20 trillion yen, the Sankei newspaper reported, without saying where it obtained the information. The BOJ may also extend the duration of the loan to six months from three months, Sankei said. “Wariness that the Japanese government may invoke some policies are stoked each time the yen comes closer to the 85 level,” said Shinichi Hayashi, a dealer in Tokyo at Shinkin Central Bank, the central institution for Japan’s financial cooperatives. “This policy outlook may slow down the pace of appreciation.” -- Editors: David Clarke, Peter Branton. To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net To contact the editors responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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