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FOREX-Yen buoyed as growth concerns fan risk-averse mood

Published 06/01/2016, 11:50 am
Updated 06/01/2016, 12:00 pm
© Reuters.  FOREX-Yen buoyed as growth concerns fan risk-averse mood
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* Yen near 2 1/2-month high vs dollar, 9-month high vs euro

* Euro hit by soft euro zone inflation data

* Pound near 9-month low vs dollar on EU referendum worries

By Hideyuki Sano

TOKYO, Jan 6 (Reuters) - The yen held firm near multi-month highs against major currencies on Wednesday as concerns over sluggish global growth and choppy oil and financial markets prompted investors to seek shelter in the low-risk low-return currency.

The U.S. dollar traded at 119.08 yen JPY= , not far from its 2-1/2-month low of 118.705 touched on Monday. It stood flat from late U.S. levels on Tuesday.

The euro fetched 128.02 yen EURJPY=R , having hit a nine-month low of 127.535 yen the previous day while the British pound slipped to a 14-month low of 174.20 GBPJPY=R on Tuesday, erasing all of its gains made after the Bank of Japan's monetary easing in October 2014.

Disappointing manufacturing surveys in China and the United States, plunges in Chinese shares and heightened tension in the Middle East following Saudi Arabia's execution of a prominent Shi'ite cleric have all helped to sap risk appetite this week.

Traders say markets would need clearer evidences of solid growth, in particular in the United States, which has been considered as one of the brightest spots in the global economy, to change the mood.

"If the upcoming U.S. job data disappoints investors, risk appetite will not come back for a while," said Takako Masai, head of market research at Shinsei Bank in Tokyo, refering to the closely-watched U.S. data due on Friday.

Wednesday will see surveys on the service sector business sentiment in China, the United States and major European countries.

Given the service sector is making up for the weakness in the manufacturing sector in many countries, any disappointment could further undermine investor sentiment.

The European currencies were softer also against the dollar on their own woes.

The euro stood at $1.0745 EUR= , having fallen 0.8 percent the previous day after data showed euro zone core inflation slowed for a second consecutive month in December.

That reinforced expectations the European Central Bank will have to add further monetary stimulus to avert deflation. urn:newsml:reuters.com:*:nL8N14P1BU

The British pound extended its losses, pressured by the risk of a destabilising referendum, expected later this year, on whether to stay in the European Union.

Having hit a nine-month low of $1.4638 GBP=D4 overnight, the unit stood at $1.4674 in early Asian trade.

British Prime Minister David Cameron on Tuesday bowed to pressure to allow government ministers to campaign to leave the European Union in an upcoming referendum, heading off the prospect of multiple resignations from his top team. (Editing by Richard Pullin)

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