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FOREX-Yen falls broadly on better risk appetite

Published 06/29/2009, 09:16 PM
Updated 06/29/2009, 09:24 PM

* Gains in oil, stocks help lift risk appetite

* Japan mutual funds buy foreign currencies, denting yen

By Rika Otsuka

TOKYO, June 30 (Reuters) - The yen slipped across the board on Tuesday as higher oil, gains in share prices and better-than-expected sentiment in the euro zone boosted hopes of a global recovery, helping investor risk appetite. Foreign currency buying linked to launches of new Japanese mutual funds also pushed down the yen in early Asian trade.

Reflecting increased risk appetite among Japanese household investors, launches of up to 170 billion yen ($1.8 billion) worth of investment funds in domestic and overseas assets are expected on Tuesday, according to data compiled by Reuters.

But activity was subdued, with many investors reluctant to move ahead of important economic events such as the Bank of Japan's quarterly tankan survey on Wednesday, a European Central Bank policy meeting and U.S. government's monthly employment report on Friday.

"Investors are wondering whether the global economy is as bad as was believed," said Tsutomu Soma, senior manager in the foreign securities department at Okasan Securities.

"They are now using any data that comes in better than expected to take risks," said Soma, adding that the yen, considered one of the lesser riskier assets, was likely to stay vulnerable.

The dollar rose 0.3 percent to 96.24 yen, but later fell back to be steady from late U.S. trade. The euro gained 0.3 percent to 135.70.

The European single currency edged up 0.2 percent to $1.4110, extending gains made the previous day when a survey by the European Commission showed economic sentiment in the euro zone improved more than expected in June.

The Australian dollar rose 0.4 percent to 77.90 yen.

U.S. crude rose above $72 per a barrel a day after jumping more than 3 percent.

Tokyo's Nikkei share average advanced 2 percent, following a rise on Wall Street. (Reporting by Rika Otsuka; Editing by Edwina Gibbs)

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