Yen Gains on View Improving Japan Economy to Fuel Fund Inflows

May 29 (Bloomberg) -- The yen rose from a two-week low against the dollar and the euro after a government report showed Japanese industrial output gained the most in at least six years, fueling speculation funds will flow into the nation’s assets.

Japan’s currency extended a second monthly gain versus the dollar after the Trade Ministry report also showed companies said they planned to increase output in May and June. Bank of Japan Governor Masaaki Shirakawa said this week the economy will resume growing this quarter after shrinking a record 15.2 percent in the three months ended March 31.

“The strong output data raised expectations for rises in capital inflow into Japanese assets,” said Masashi Hashimoto, Tokyo-based senior foreign-exchange analyst at Bank of Tokyo- Mitsubishi UFJ Ltd., a unit of Japan’s largest lender. “As worries about the global gloom ease, the correlation between the yen and economic data and stock prices may turn positive.”

The yen climbed to 96.49 per dollar as of 9:34 a.m. in Tokyo from 96.85 in New York yesterday, when it fell to 97.24, the weakest since May 12. The yen gained to 134.75 versus the euro from 135.04 yesterday, when it touched 135.29, the lowest since April 7. The dollar bought $1.3961 per euro from $1.3941.