Thursday July 9, 12:06 PM
Dollar recovers versus yen
LONDON (AFP) - The dollar recovered against the yen on Thursday, a day after hitting a near five-month low, as markets weighed a warning from world leaders that "significant risks" remain to the economy.
Sterling meanwhile rose against its main rivals before announcements on monetary policy by the Bank of England due at 1100 GMT.
In late morning London trade, the European single currency rose to 1.3958 dollars from 1.3885 dollars in New York late on Wednesday.
The dollar climbed to 93.37 yen from 92.86 yen late Wednesday.
Speculators sold the Japanese currency to lock in gains seen Wednesday, when the dollar briefly hit 91.81 yen, the weakest since February 17.
Mounting uncertainty about the prospects for a global economic recovery have in recent days supported the yen, which is seen as a safe haven during times of market turmoil, dealers said.
"The huge outperformance of the yen during the last week is a clear and screaming sign of risk aversion," said Societe Generale (Paris: FR0000130809 - news) analyst Patrick Bennett.
Investor (Stockholm: INVE-B.ST - news) sentiment soured after Group of Eight leaders meeting Wednesday in the Italian town of L'Aquila (NYSE: ILA - news) warned that the world economy was still in danger.
"While there are signs of stabilisation, including recovery in stock markets... the situation remains uncertain and significant risks remain to economic and financial stability," G8 nations said in a communique.
Players were looking ahead to US data due Thursday on weekly claims for unemployment benefits, after the US unemployment rate jumped to a 26-year high of 9.5 percent in June, dashing hopes of an improvement.
Elsewhere Thursday, sterling gained against the dollar and euro awaiting the Bank of England's policy announcements. Analysts said the BoE was expected to reveal it planned to pump more money into markets in a bid to stimulate lending -- but will likely keep British interest rates at a record-low 0.50 percent.
Most economists expect the central bank will agree to pump out another 25 billion pounds (28.9 billion euros, 40.4 billion dollars) for lenders as part of its quantitative easing (QE) scheme.
Under QE, the BoE purchases government bonds from commercial banks in an attempt to encourage them to lend more money to businesses and individuals.
In London trade Thursday, the euro was changing hands at 1.3958 dollars against 1.3885 dollars late on Wednesday, 130.31 yen (128.96), 0.8640 pounds (0.8642) and 1.5141 Swiss francs (1.5132).
The dollar stood at 93.37 yen (92.86) and 1.0848 Swiss francs (1.0895).
The pound was at 1.6152 dollars (1.6063).
On the London Bullion Market, the price of gold fell to 914.35 dollars an ounce from 918 dollars an ounce late on Wednesday.
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