* Yen hits multi-month and multi-week highs against peers
* Worries about some Portuguese banks knock equities lower
* Safety bids seen keeping yen supported
By Ian Chua
SYDNEY, July 11 The yen was poised to end the
week higher on Friday, having lunged forward overnight as a fall
in global equities lifted demand for the safe-haven currency.
Fears over financial troubles at the family-owned holding
companies behind Portugal's largest listed bank unsettled
European markets on Thursday.
That in turn weighed on Wall Street and the knock-on effect
could see Asian stocks open lower.
All this should underpin demand for the yen, which scaled a
five-month peak against the euro. It also hit a seven-week high
on the dollar and reached its highest in over a month on the
The euro last traded at 137.78 yen, having fallen
as far as 137.50, while the dollar was at 101.29 after a
foray into the 101.00 area. The Aussie fetched 95.04,
following a dip to 94.66.
Sentiment for the euro took a broad hit. The common currency
slid as far as $1.3589 from a session high of $1.3651.
Against the New Zealand dollar, it fell to its lowest in over a
year at NZ$1.5394.
Details of Portugal's banking woes were complicated to say
the least and left markets in two minds about whether this was a
bank-specific event or something more systemic.
The fact that Wall Street managed to close off the session
low and U.S. Treasuries saw only modest bids indicated that
investors initially over reacted to the news.
Evan Lucas, strategist at IG in Melbourne, said markets tend
to act now and ask questions later in situations like this.
"Considering we currently have record-low volatility in the
bond and currency markets, and near record-low volatility in the
equity markets, coupled with record highs in equities, the
protection of profits will take priority," he said.
"The question that will come later is: Is this an isolated
event or is it the first chink in the chain to fire contagion
Worries about the Portuguese banks overshadowed other events
including the Bank of England's policy review. The BOE held
interest rates at record lows on Thursday but offered no new
guidance on its policy outlook.
Sterling eased slightly on the dollar to $1.7132,
but stayed near a six-year high of $1.7180 set earlier in the
There are no major economic data out of Asia on Friday,
leaving the focus squarely on how equity markets in the region
will react to the declines in Europe and Wall Street.
(Editing by Eric Meijer)