* Yen climbs towards 11-week highs vs dollar and euro
* U.S. Jan private job growth slightly short of forecast
* Sterling falls after below forecast UK PMI services data
By Anirban Nag and Richard Leong
LONDON/NEW YORK, Feb 5 The yen rose on Wednesday
towards recent two-month highs against the dollar and euro as
stock markets struggled on nagging worries about emerging
markets and global economic growth, forcing investors to seek
Safe-haven demand for the yen was supported by a slightly
below-forecast 175,000 gain in U.S. private job growth in
January reported by ADP. This mildly weaker-than-expected labor
indicator raised concerns the government's January payroll
report might be weaker than expected, which in turn could add
selling pressure on the dollar and stocks.
The latest ADP figure was "a mild disappointment, but it's
not a big enough of a surprise to move the currency market,"
said Richard Franulovich, senior currency strategist at Westpac
Banking Corp in New York.
The dollar briefly touched session lows against the yen
after the ADP data before rebounding to match levels prior to
that jobs report. The greenback was last 0.3 percent lower to
101.31 yen after falling as much as 0.85 percent earlier.
The euro shed 0.5 percent to 136.90 yen after
hitting a session low 136.51 yen.
Both the dollar and euro fell to 11-week troughs on Tuesday,
when the dollar hit a low of 100.755 yen and the euro fell as
low as 136.25 yen.
Wall Street stocks opened lower with the Standard & Poor's
500 index last down 0.3 percent.
"Stock futures are falling, so that is helping the yen,"
said Jeremy Stretch, head of currency strategy at CIBC World
Markets. "The key will be the U.S. data, and any missing of
forecasts will challenge the global recovery story and push
dollar/yen towards the 100.60 support."
Before the release of ADP report, euro zone retail sales
fell sharply in December, while the final composite PMI survey
fell short of its initial reading.
Reflecting investors' nervousness, implied volatility in the
dollar/yen and the euro/yen pairs - a gauge of how sharp swings
will be in the currency market - remained elevated. One-week
dollar/yen implied vols were trading at 11.4 percent,
up from around 8 percent a week ago.
Against the dollar, the euro was slightly lower at $1.3510
, holding above a two-month low around $1.3477 set on
Monday amid caution that the European Central Bank could sound
more dovish at Thursday's policy review.
With inflation well below the ECB's target and the spectre
of deflation gripping the euro zone, the central bank is under
pressure to loosen policy. But there is also a risk the ECB may
hold off, which could see the euro bounce.
Sterling fell 0.3 percent towards seven-week lows,
and was last trading at $1.6280 after UK services PMI fell short
of expectations and led investors trim expectations of a rate
hike by the Bank of England in the near term.
"The softer-than-expected manufacturing PMI data on Monday
and PMI services can be linked with the pound's poor
performance, but we expect that many investors are adjusting
their positions in response to the increased risk that the BoE
is poised to re-affirm a dovish position," said Jane Foley,
senior currency strategist at Rabobank in London.
The Bank of England will release its quarterly inflation
report next week and is widely expected to reaffirm its pledge
to keep rates low for longer and tweak its unemployment target.