* Yen tends to move inversely to Nikkei
* Yen seen gaining vs euro, sterling
* Euro hits one-month low versus dollar then rises
By Laurence Fletcher
LONDON, Jan 6 The yen rose on Monday, pulling
away from recent five-year lows versus the dollar and the euro,
as a fall in global stocks prompted traders to buy the
safe-haven Japanese currency.
The dollar fell 0.3 percent to 104.55 yen while the
euro was down 0.1 percent at 142.25 yen.
Asian shares led global stocks lower after
growth in China's services sector slowed sharply last month.
The Nikkei and the yen - last year's weakest major
currency - tend to move in opposite directions. A rally in the
index is often a signal for speculators to sell the yen and buy
higher-yielding currencies, while that trade may be unwound when
risk appetite falls.
A weaker currency, on the other hand, boosts Japanese
exports, which helps shares.
Traders and analysts said the Nikkei's 2 percent drop
on Monday helped spur yen buying, including some
"This is very much driven from Asia... The yen has been used
as a funding currency and will gain support," said Ian Stannard,
head of European currency strategy at Morgan Stanley.
He said euro/yen and sterling/yen could
come under particular pressure.
"The euro and sterling have been very well supported into
year-end, but now those year-end factors have started to slow
down. This suggests they're vulnerable against a yen that is
The euro - whose second-half rally was driven by factors
such as euro zone banks repatriating funds to shore up their
capital bases and repaying cheap loans to the ECB - slipped to a
one-month low of $1.35715 in Asian trading.
It was last up 0.1 percent at $1.3602, barely reacting to
euro zone final December PMI data.
The dollar index edged higher to 80.872, near a
one-month high of 80.895 set on Friday.
The first full trading week of 2014 could offer investors
more clues to the dollar's direction in the months ahead.
The minutes of the U.S. Federal Reserve's December meeting
are due on Wednesday. Policymakers decided at the meeting that
they would begin to pare stimulus and cut asset purchases by $10
billion to $75 billion a month. The minutes could hint at the
timing and pace of any further reductions in Fed stimulus.
Friday will bring the December U.S. payrolls report, which
could suggest whether domestic job growth is strong enough for
the Fed to continue tapering its asset buying.
Fed Chairman Ben Bernanke, who steps down at month's end,
gave on Friday an upbeat assessment of the U.S. economy in
coming quarters. But he tempered the good news in housing,
finance and fiscal policies by repeating that the overall
recovery "clearly remains incomplete" in the United States.