LONDON Oil producer Norway's crown jumped on Friday, boosted by concerns about Europe's energy supply as tensions between Russia and the West over Ukraine rose.
Other major currency markets calmed after an initial surge for the traditionally safe-haven yen and Swiss franc following the downing of a passenger jet over eastern Ukraine on Thursday. Both fell on Friday.
The crown rose just over half a percent to trade at 8.3520 crowns per euro.
Valentin Marinov, head of European currency strategy at Citigroup in London, said worries over relations with Russia were outweighing the prospect of another cut in Norwegian interest rates next year.
The Norwegian central bank's shift in June to a looser approach to monetary policy had sent the crown down over 3 percent against the euro in the month to Thursday.
"Lingering tensions between Russia and the West could be seen as a long-term positive for the Norwegian crown," said Marinov.
"Persistent uncertainty about the situation in Ukraine and more Russian sanctions could encourage a European diversification away from Russian gas and oil supplies into Norwegian gas and oil supplies."
The yen hit a five-month high versus the euro in Asian trade as investors worried that the shooting down of the Malaysian airliner could potentially lead to heavier economic sanctions that might weaken global growth.
The Japanese currency was down 0.3 percent against the euro and 0.2 percent against the dollar in morning trade in Europe.
Strategists said that, while events in Ukraine and Israel's launch of a ground campaign in Gaza were a concern, markets have grown used to the idea that any deeper economic fallout would always be countered by yet more action from global central banks.
"Every time we get a slight retreat in risk appetite, it is if anything used by people as a chance to buy back in rather than scale back on risk properly," said Richard Falkenhall, a currency strategist with Swedish bank SEB in Stockholm.
"Before the 2008 crisis these sorts of events had a much bigger impact on financial markets. Now everyone knows that if something goes wrong the Fed can just halt tapering or even increase it again. That support wasn't there in the past."
U.S. Treasury yields US10YT=RR, depressed by the trillions of dollars of bonds the U.S. Federal Reserve has bought and a key driver for the dollar, were flat in morning trade after falling around 10 basis points on Thursday.
The Malaysian Airlines passenger jet was brought down over eastern Ukraine. All 298 people on board were killed, sharply raising the stakes in a conflict between Kiev and pro-Moscow rebels in which Russia and the West back opposing sides.
The yen is still up around 0.6 percent this week against the euro EURJPY=EBS.
"Should risk sentiment falter again today, we would be looking for USD/JPY to break the 101.00 support. USD/JPY 101.6 appears as a solid resistance," said Petr Krpata, a strategist with Dutch bank ING in London.
The euro is down the most in more than a month this week due to hints that U.S. officials may yet raise interest rates earlier than markets expect next year. The common currency traded broadly flat against the dollar at $1.3532.