* Dollar drops vs yen after fall on weak U.S. data
* Aussie falls on credit concern for nation's top lender
* Yen rises broadly as Asia equities fall
By Satomi Noguchi
TOKYO, July 25 (Reuters) - The dollar dropped against the yen
on Friday, extending falls from a one-month high hit the previous
day on disappointing news on the U.S. housing sector and steep
losses on Wall Street.
U.S. jobless claims have jumped and the pace of existing home
sales has tumbled to a 10-year low, data showed on Thursday,
reminding investors of the problems plaguing the world's largest
economy.
The yen rose broadly as Asian equities fell and triggered the
unwinding of carry trades, which consist of selling low-yielding
currencies to buy higher-yielding currencies and assets.
"There is some continuation today of a situation where the
yen is bought on risk reduction as equities are sold," said
Tokichi Ito, deputy general manager for Trust & Custody Services
Bank's forex team.
The dollar fell 0.5 percent against the yen <JPY=> from late
U.S. trade on Thursday to 106.80 yen, dropping further from a
one-month high of 107.99 yen hit the previous day.
"The weakness in the U.S. housing sector is the root of
concerns for bank problems and the economy there," said a trader
at a Japanese trust bank.
"Though the weak data was not something new, it cooled
sentiment for players who had bought the dollar in recent
sessions," the trader said.
Traders said the dollar was pressured on caution before more
U.S. data later in the day, including new home sales and durable
goods orders for June.
The euro rose against the dollar, trimming some of the losses
it made after data on Thursday showed that German corporate
sentiment in July hit the lowest level since September 2005.
The euro rose 0.2 percent to $1.5699 <EUR=> but fell 0.4
percent against the yen to 167.67 yen <EURJPY=R>, retreating
further from an all-time high of 169.97 yen hit earlier this
week.
Some traders said the dollar came under pressure partly
because of a report on a website called MFFAIS that said
Singapore's Temasek Holdings liquidated 50 percent of its
investment in Merrill Lynch.
But a source briefed on the situation told Reuters that since
March 31, Temasek had not reduced its shareholding in Merrill.
Temasek invested $5 billion in Merrill Lynch in December and
February at a time when sovereign funds from Asia and the Middle
East were propping up global banks reeling from subprime-related
credit losses.[]
AUSSIE, KIWI FALL
The New Zealand dollar fell after the Reserve Bank of New
Zealand cut interest rates on Thursday, and other higher-yielding
currencies extended falls on the view that U.S. economic woes are
spreading to other parts of the world.
"There are no major currencies attractive enough to draw
aggressive buying now," said a trader at a major Japanese bank.
The Australian dollar fell on concerns about the impact of
the credit crisis on the nation's top lender.
National Australia Bank Ltd said on Friday it had raised
provisions for its exposure to collateralised debt obligations
(CDOs) by a further A$830 million ($798 million).
The Australian dollar fell 0.2 percent to $0.9576 <AUD=D4>
and the kiwi fell 0.1 percent to $0.7422 <NZD=D4>.
Against the yen, the Aussie <AUDJPY=R> and the kiwi
<NZDJPY=R> both fell around 0.7 percent.
Japan's annual core inflation climbed to a fresh decade-high
of 1.9 percent in June, data showed on Friday.
But the market was unmoved because the data matched
economists' forecasts and did not alter expectations that the
Bank of Japan will hold interest rates steady for a while.
(Additional reporting by Masayuki Kitano)
