Yen May Advance on Concern U.S. Firms to Report Weaker Earnings

July 23 (Bloomberg) -- The yen may rise for a third day versus the euro on speculation U.S. companies including CIT Group Inc. and American Express Co. will report weaker earnings today, reviving demand for the safety of Japan’s currency.

The yen gained for a fourth day against the dollar yesterday after Morgan Stanley reported a larger second-quarter loss than analysts predicted and Wells Fargo & Co. said bad loans jumped. The yen and dollar may also rise before a U.S. report that economists said will show jobless claims increased, adding to concern the global recession will be prolonged.

“Risk aversion is likely to stay prominent, given earnings announcements by companies including CIT,” said Yuji Saito, head of the foreign-exchange group in Tokyo at Societe Generale SA, France’s third-largest bank. “The bias is for haven currencies such as the yen to be bought.”

The yen traded at 132.87 per euro as of 8:55 a.m. in Tokyo from 133.18 yesterday in New York. Japan’s currency was at 93.56 versus the dollar from 93.68. The dollar was at $1.4202 per euro from $1.4220.

The yen typically strengthens during times of financial turmoil because Japan’s trade surplus means the nation doesn’t have to rely on overseas lenders.

Morgan Stanley said yesterday it made a loss from continuing operations of $159 million last quarter compared with earnings of $689 million in the same period a year earlier. Wells Fargo said assets no longer collecting interest climbed 45 percent to $18.3 billion as of June 30 from the first quarter.

CIT Earnings

CIT said on July 21 it expected to post a loss of more than $1.5 billion for the second quarter, renewing concern the New York-based lender may have to file for bankruptcy.

The number of Americans filing claims for unemployment benefits rose to 557,000 last week from 522,000 the previous week, according to a Bloomberg News survey of economists. The Labor Department will release the report today in Washington.

The yen was little changed after Japan’s Finance Ministry said today the nation’s exports declined 35.7 percent in June from a year earlier. Economists predicted a decrease of 35.1 percent, according to a Bloomberg News survey. From a month earlier, shipments rose 1.1 percent.