The yen and dollar strengthened after a Chinese report showed exports rose the least in seven months and the customs bureau warned of “severe” challenges, adding to concern global growth is slowing. The euro declined from the highest in almost five weeks against the yen after German economic institutes cut their projections for the nation’s growth and the European Central Bank said the involvement of private-sector banks in bailouts would risk financial stability. The pound fell against the dollar and yen amid speculation a weakening U.K. economy will bolster the case for further central-bank asset purchases. “The yen has done well since the Chinese data,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “It’s difficult for Japan to put some kind of domestic currency measure in place” to halt gains in its currency, he said. Japan’s currency appreciated 1 percent to 105.55 per euro at 8:34 a.m. in New York after sliding yesterday to 107.05, the weakest since Sept. 9. The yen advanced 0.5 percent to 76.88 per dollar. The euro declined 0.5 percent to $1.3728. Sterling declined versus the dollar after Deputy Bank of England Governor Charles Bean said policy makers “could well decide” to expand quantitative easing again. Bean spoke in an interview with the Guardian newspaper published today after the central bank last week expanded its asset-purchase program to 275 billion pounds ($431 billion) from 200 billion pounds. ‘May Be Necessary’ “We’re expecting that another round of QE may be necessary once the current asset purchases are done,” said Sarah Hewin, a senior economist at Standard Chartered Bank in London. The pound fell 0.5 percent to $1.5676 and weakened 1 percent to 120.53 yen. The yen strengthened against all but one of its 16 major counterparts after China’s customs bureau said exports rose a less-than-forecast 17.1 percent in September from a year earlier. The trade surplus was $14.51 billion, the smallest since May. Growth in shipments to Europe, China’s biggest export market, slumped to 9.8 percent, from 22 percent. Japan’s currency tends to appreciate during economic and financial turmoil because the nation’s current-account surplus makes the nation less reliant on foreign capital. Dollar Index The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback versus the currencies of six major trading partners, rose 0.2 percent to 77.224. The U.S. trade deficit was little changed at $45.6 billion in August, the Commerce Department reported. The shortfall compared with a median projection of $45.8 billion in a Bloomberg News survey of economists. Exports were little changed at $177.6 billion, while imports totaled $223.2 billion. Applications for unemployment insurance payments decreased 1,000 in the week ended Oct. 8 to 404,000, Labor Department figures showed. Economists forecast 405,000 claims, according to the median estimate in a Bloomberg News survey. The number of people on unemployment benefit rolls dropped to the lowest level in six months. Japan’s currency also rallied after yesterday’s 0.8 percent slide against the dollar as investors pared bets the Bank of Japan will introduce additional measures to weaken the currency. “The yen is not exceptionally strong in real terms,” Robert Ryan, a currency strategist at BNP Paribas SA in Singapore, wrote in a note to clients. “There is no international support for such actions and it would completely compromise BOJ independence.” Germany’s Growth The euro fell versus the dollar after a biannual independent report commissioned by the German government forecast the nation’s growth will slow to 0.8 percent next year from 2.9 percent in 2011. In April, the group predicted the economy would expand 2 percent for 2012. The ECB said in its monthly bulletin that while private- sector involvement “is certain to place significant stress on the solvency of banks and other private financial institutions in the country concerned, it will also have an impact on the balance sheets of banks in other euro-area countries.” The Stoxx Europe 600 Index fell 1 percent, led by banking stocks. Futures on the Standard & Poor’s 500 Index expiring in December decreased 0.4 percent. The euro has dropped 3.3 percent over past 12 months according to Bloomberg Correlation-Weighted Indexes, which track the currencies of 10 developed nations. The dollar has weakened 1.5 percent and the yen has risen 5.6 percent. To contact the reporters on this story: Allison Bennett in New York at abennett23@bloomberg.net; Lucy Meakin in London at lmeakin1@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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