Yen Rises to 3-Week High on Concern Recession Will Be Prolonged

June 23 (Bloomberg) -- The yen strengthened to a three-week high against the euro as Asian stocks slumped, spurring demand for the relative safety of Japan’s currency.

The yen advanced against all 16 major currencies before a French report today that economists say will show consumer spending slowed in Europe’s third-largest economy, adding to signs the global recession will be prolonged. Japan’s currency also gained against the dollar before a U.S. report tomorrow that may show durable-goods orders declined in May.

“Worries that the ‘green shoots‘ of the global recovery are unlikely to be sustainable may make investors risk averse,” said Hideki Amikura, deputy general manager of foreign exchange in Tokyo at Nomura Trust and Banking Co., a unit of Japan’s largest brokerage. “This will probably lead to yen appreciation.”

The yen advanced to 132.02 per euro as of 9:58 a.m. in Tokyo from 132.93 yesterday in New York. It earlier reached 131.94, the strongest level since May 28. The yen climbed to 95.42 per dollar from 95.87, after rising to 95.29, the highest since June 1. The dollar rose to $1.3838 per euro from $1.3865.

The Nikkei 225 Stock Average fell 2.6 percent and the MSCI Asia Pacific Index of regional shares dropped 1.9 percent. The World Bank yesterday predicted the global slump will be deeper than it originally forecast.

Growth in French consumer spending slowed to 0.2 percent in May from a 0.7 percent increase in April, according to a Bloomberg News survey of economists before the national statistics office releases the report today in Paris.