* Yen jumps on investor risk aversion after WSJ report
* Hits 7-week peak vs euro, 1-month high vs dollar
* Swine flu fears cause investors to cut risky bets
* Flu scare seen damaging global economic recovery
By Satomi Noguchi
TOKYO, April 28 (Reuters) - The yen climbed to a seven-week
peak against the euro and a one-month high versus the dollar on
Tuesday on growing risk aversion after a newspaper reported that
two major U.S. banks may need more capital.
The Wall Street Journal said regulators have told Citigroup
<C.N> and Bank of America Corp <BAC.N> they may need to raise
more capital based on early results of the government's "stress
tests" of lenders. The government is set to unveil the results on
May 4. []
"While most of the 19 banks that have been tested are
expected to show less negative results, Citi and BofA seem to be
in a shaky situation, prompting investors to pick up the yen on
risk aversion as stocks fell," said Takashi Kudo, a director at
NTT SmartTrade.
U.S. stock futures extended their fall <SPc1> after the
report, sliding 1.3 percent in Asian trade and helping drag
Tokyo's Nikkei share average <> down 2.7 percent.
The Australian and New Zealand dollars fell sharply against
the yen and the dollar on doubts about the potential impact of
the flu outbreak on global trade and consumer confidence.
The flu virus has killed up to 149 people in Mexico, and the
World Health Organization moved closer on Monday to declaring it
the first flu pandemic in 40 years as more people were infected
in the United States and Europe.[]
The flu scare hurt the Mexican peso, which fell to near a
one-month low against the dollar after tumbling the previous day
to post its worst performance against the greenback in six
months. However, peso trading is limited due to thin liquidity in
Asian trade.
"Speculative players are betting on views that worries about
the spread of swine flu will damage the global economic recovery
after seeing stocks related to travel and commodities hit," said
a senior currency trader at a Japanese bank.
The euro dropped as low as 124.51 yen on trading platform
EBS, its lowest since March 12, but later pared some of its
losses to 124.75 yen, down 1.1 percent from late New York trade
on Monday.
The dollar slid to a one-month low of 95.74 yen <JPY=>
earlier but later recovered to 95.81 yen, down 1.0 percent.
Despite sharp moves in the yen, some Tokyo traders were
reluctant to place big bets ahead of a series of Japanese public
holidays starting on Wednesday.
The euro fell 0.1 percent to $1.3018 <EUR=>, in choppy trade
above the day's low of $1.2985.
The Australian dollar dipped to 67.14 yen <AUDJPY=R>, its
lowest in four weeks. The Aussie was also hit by news that global
miners had agreed to accept sharp cuts in the iron ore prices
that they charge steel makers in China, a major buyer.
[]
The New Zealand dollar briefly fell to 53.17 yen, its lowest
since March 20, and was later trading down 2.4 percent at 53.23
yen <NZDJPY=R>.
The Aussie and the Kiwi had benefited over the last few
months as the market became hopeful that the global recession had
bottomed out.
The Mexican peso <MXN=> was quoted around 14.08 per dollar,
according to Reuters data, its lowest since the start of this
month.
(Additional reporting by Kaori Kaneko; Editing by Joseph
Radford)
