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FOREX-Yen rises vs dollar on U.S. bank jitters

Published 04/23/2009, 12:12 AM
Updated 04/23/2009, 12:40 AM
MS
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* Yen rebounds towards a three-week high vs dollar

* Investors wary of U.S. bank stress tests

* Aussie gives up gains made vs yen after Kirin news

By Satomi Noguchi

TOKYO, April 23 (Reuters) - The yen rose broadly on Thursday, climbing back towards a three-week high against the dollar touched the previous day, as U.S. stock futures fell and concerns about the banking sector re-emerged after disappointing earnings from Morgan Stanley.

S&P futures fell 0.3 percent after U.S. stocks faced a late hour sell-off on Wednesday, with investors concerned about the outlook for banks ahead of the U.S. government's "stress test" results.

The Wall Street Journal reported that U.S. banks will be briefed by regulators as early as Friday on how they performed in the tests before the results are made public later.

Some estimates of banks' likely losses that were used in the stress tests were tougher than expected, the newspaper said.

That fanned fears about more losses at the banks included in the tests after some upbeat earnings reports earlier this month, prompting investors to cut riskier trades in which they had sold the yen against other majors, traders said.

"The currency market is lacking a clear direction, just as U.S. stocks are," said a trader at a Japanese bank.

"We have two big factors that are swinging the markets between optimism and pessimism: the eventual state of the troubled U.S. automakers, and the results of bank stress tests," the trader said.

The dollar fell 0.2 percent to 97.79 yen, sliding back near a three-week trough of 97.57 yen touched on Wednesday.

The euro fell 0.4 percent to 126.99 and dropped 0.1 percent to $1.2987.

The Australian dollar gave up earlier gains against the yen and the dollar as most Asian stocks fell and metals like Shanghai copper dropped amid the bleak outlook for the global economy.

The International Monetary Fund cut growth forecasts for every major economy, in line with the fund's assessment that the world was in its deepest post-World War Two recession.

The Aussie earlier rose against the yen after Japanese beer maker Kirin Holdings said it had offered to buy all shares in Australian brewery Lion Nathan.

It also briefly gained the New Zealand dollar on growing speculation that while Australian interest rates will stay on hold, the Reserve Bank of New Zealand is likely to cut rates next week.

That speculation was fuelled after central bank watcher Terry Mcrann wrote that the Reserve Bank of Australia might choose to keep rates steady in May and June, after core inflation was surprisingly firm in the fourth quarter.

The Australian dollar fell 0.2 percent to 68.82 yen after rising to near 69.50 yen earlier, and slid 0.2 percent to $0.7045.

The Aussie dropped 0.2 percent against the kiwi to NZD$1.2682, after rising above NZD$1.2700 earlier. (Editing by Chris Gallagher)

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