(Corrects dollar/yen all-time low in 9th para)
* Market wary of possible Japan action on yen
* But current price may restrict action
* Euro boosted by unexpected rise in German Ifo survey
(Adds detail, updates prices)
By Neal Armstrong
LONDON, Aug 25 (Reuters) - The yen pulled back from 15-year
highs against the dollar and a nine-year peak versus the euro on
Wednesday on speculation Japanese authorities may take active
steps to stem the currency's rise.
The euro was also boosted after German Ifo business
sentiment unexpectedly rose to a three-year high in August.
Caution on the yen initially stemmed from a Nikkei business
daily report saying Japan's Ministry of Finance may consider
unilateral yen-selling intervention if speculators drive up the
currency. []
Finance Minister Yoshihiko Noda reinforced that view,
telling reporters on Wednesday that recent yen moves were
one-sided and that Tokyo would respond appropriately when
necessary. []
But some in the market said intervention was unlikely at
current levels.
"It's unlikely there would be intervention much above 80
yen," said Ray Farris, chief currency strategist at Credit
Suisse in London.
"Price action is not disorderly and the yen is not
overvalued by our estimates."
At 0925 GMT, the dollar was trading with gains of around 0.6
percent versus the yen <JPY=> at 84.60 yen, still within reach
of a 15-year low hit on Tuesday of 83.60. Traders reported
demand for short-term 85.00 yen option strikes as intervention
jitters increased.
The all-time low for dollar/yen, hit in April 1995, is
around 79.75 yen.
The yen also slipped against the euro <EURJPY=R>, which
triggered stop-losses back above 107.00 yen to trade with gains
of around 1.3 percent at 107.40 yen after falling to a nine-year
low at 105.44 on trading platform EBS on Tuesday.
U.S. DEFLATION FEARS
Traders were also closely watching the Nikkei average of
Tokyo stocks <>, which fell more than 2 percent to a
16-month low, calculating that the steeper its losses the more
likely Japanese authorities might finally bite the bullet and
intervene.
Analysts were sceptical about just how effective any
intervention by Japan alone would be.
"We would expect hedge funds to sell into any intervention,
given that the USD/JPY move is driven by U.S. deflation fears,"
currency analysts at ING said in a note to clients.
Dismal housing data on Tuesday escalated concerns about the
U.S. economy, prompting a further bout of risk reduction as
stocks traded with heavy losses, increasing demand for safe
havens such as the yen and the Swiss franc. []
The Swissie rallied to an all-time high versus the euro
<EURCHF=> of 1.2988 francs.
"Risk aversion is up, yields are lower and I think
euro/Swiss can continue to come lower. Switzerland's large
surplus makes it a safe haven," said Farris at Credit Suisse.
The euro rose versus the dollar <EUR=> to a session high of
$1.2722 after the German Ifo [] survey came in
above forecasts. Traders said Middle-East and Swiss supply
capped the rally.
Earlier, the currency took a hit after Standard & Poor's
downgraded Ireland one notch to AA- and warned the outlook was
still negative, fanning worries about euro zone sovereign debt
and the banking system. [].
(Additional reporting by Kaori Kaneko, editing by John
Stonestreet)
