Thursday July 23, 11:21 AM
Yen slips in response to stocks rise
LONDON (AFP) - The yen fell against the dollar and euro on Thursday as this week's gains on global stock markets reduced the appeal of the safe-haven Japanese currency, analysts said.
Political uncertainty was also seen as weighing on the yen as Japan gears up for an election next month that looks likely to sweep Prime Minister Taro Aso's party from power after more than half a century of almost unbroken rule.
In late morning trading here, the dollar advanced to 94.30 yen from 93.56 yen late in New York on Wednesday.
The European single currency rose to 134.18 yen from 133.00 yen late on Wednesday. The euro meanwhile increased to 1.4230 dollars from 1.4219 dollars.
Riskier currencies such as the euro got a boost as Asian stock markets extended a rebound, with Japan's Nikkei index (news) rising for a seventh day running.
But European equities held steady on Thursday as stock market investors eyed more upcoming company results and key data in the recession-hit United States.
"The strength in stocks and a more bullish outlook on economic recovery continues to increase risk appetite," said CMC Markets trader James Hughes.
But some market watchers questioned whether markets were getting ahead of themselves.
"If you look at fundamental factors, you don't want to take risks yet since US economic and financial market conditions are still fragile," Yuji Saito, head of forex at Societe Generale (Paris: FR0000130809 - news) , told Dow Jones Newswires.
Investors were meanwhile digesting Federal Reserve chairman Ben Bernanke's congressional testimony in which he reiterated that the US economy was not yet strong enough for an end to the Fed's highly stimulative monetary policy.
Germany's finance minister said on Thursday that the US dollar would remain the world's top currency after the financial crisis is over -- but added that the euro and the Chinese yuan would gain in importance.
In an interview with Manager magazine to appear on Friday, the minister Peer Steinbrueck was asked if the US dollar would retain its position as the world's reserve currency after the dust has settled on the worst economic crisis since the Great Depression.
"That is the 10,000 dollar question," Steinbrueck quipped. "I would say: yes, but the yuan and the euro will also gain in relative significance."
In London trading on Thursday, the euro was changing hands at 1.4230 dollars against 1.4219 dollars late on Wednesday, 134.18 yen (133.00), 0.8612 pounds (0.8629) and 1.5194 Swiss francs (1.5155).
The dollar stood at 94.30 yen (93.56) and 1.0678 Swiss francs (1.0654).
The pound was at 1.6512 dollars (1.6474).
On the London Bullion Market, the price of gold rose to 952.80 dollars an ounce from 948.25 dollars an ounce late on Wednesday.
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