* Dollar, yen supported with global optimism tempered
* Stocks decline, appetite for risk is dented
By Shinichi Saoshiro
TOKYO, April 15 (Reuters) - The yen and the dollar gained on
Wednesday as optimism about a global economic recovery ebbed
following weaker-than-expected U.S. economic figures, which
cooled demand for other currencies.
The dollar and yen also drew support from falls in Asian
stocks, which tracked Wall Street lower. U.S. stock market
benchmarks slid on Tuesday after news that U.S. retail sales fell
1.1 percent in March against economists' forecast for a 0.3
percent rise. [] []
"The retail sales data was a step towards ending recent
economic optimism and the related rally in stocks," said Toru
Umemoto, chief FX strategist at Barclays Capital in Japan.
Since early February the yen has declined against such
currencies as the Australian and New Zealand dollars as investor
confidence has picked up, and low interest rates have seen market
participants seek currencies with higher rates and expectations
of a faster economic recovery.
One trader said Wednesday's gain in the yen came as Japanese
importer demand for the dollar petered out and funds outside
Japan that had bet on a further yen fall had been forced to buy
it back, sending it higher across the board.
The dollar lost 0.5 percent to 98.47 yen <JPY=> after falling
as low as 98.15 yen on trading platform EBS. Last week it touched
its highest in six months at 101.45 yen.
The euro dropped briefly blow 130 yen before rebounding to
130.45 yen <EURJPY=R>, down 0.6 percent on the day. It retreated
from a six-month high of 137.42 yen struck earlier this month.
The euro fell 0.1 percent to $1.3247 <EUR>.
Traders said the euro also faced selling pressure from market
talk that Japanese investors may repatriate funds invested in
euro zone government bonds, as uncertainty about the global
economic outlook makes them more conservative.
Japanese life insurers, who hold about $1.5 trillion in
assets, have told Reuters in recent interviews they are likely to
favour yen bonds over foreign assets in the financial year that
started on April 1. []
Redemption of 45 billion euros ($59.6 billion) of bonds and
coupon payments are expected this week [].
The Australian dollar fell 0.5 percent to $0.7175 <AUD=D4>
and dropped 0.6 percent to 70.62 yen after hitting a six-month
high of 73.49 yen the previous day.
The Aussie climbed to six-month highs against the dollar and
yen earlier in the week partly on optimism that a rebound in the
Chinese economy would drive demand for commodities. China
releases first-quarter GDP figures on Thursday.
Tokyo's Nikkei average <> lost 1.1 percent on Wednesday.
[] U.S. stock futures <SPc1> shed 0.7 percent, pointing to a
lower open on Wall Street later in the day.
Following Tuesday's weaker-than-forecast retail sales numbers
the market is bracing for U.S. data later in the day including
March consumer prices and industrial production.
While sombre economic figures could give fresh support to the
dollar and yen in the short term, analysts said there were
concerns the dollar could be harmed by the Federal Reserve's
buying of government bonds to keep long-term interest rates down.
"Increased money supply has been one of the major factors
weighing on the dollar against the yen," said Umemoto at Barclays
Capital.
"Concerns over the dollar are expected to mount as fiscal
conditions in the United States deteriorate."
Market watchers are also eyeing U.S. net foreign securities
purchases data for February due for release later in the day.
After a net outflow of $43 billion in January, the focus is on
whether the outflow has been reversed or at least curbed.
($1=.7549 Euro)
(Editing by Hugh Lawson)
