(Recasts, adds fresh quotes)
* Yen at 3-week high vs euro, stocks drop, Portuguese yields
* Fed minutes indicate bond-buying will end in October
* Swedish crown at 1-week high after inflation data
By Anirban Nag
LONDON, July 10 The yen rose to a three-week
high against the euro on Thursday as investors sought safety
following weak Italian economic data and concerns about
Portugal's largest listed bank that hit European shares.
The euro also weakened against the dollar, itself under
pressure after minutes of the Federal Reserve's June meeting
gave no clear signal on the timing of an interest rate rise.
Data showing consumer prices in Sweden rose more than
expected last month meanwhile pushed the Swedish crown to a
one-week high against the common currency. That drove some
investors to trim short bets against the crown made after
Sweden's central bank cut interest rates sharply last week.
Volumes were largely seen in the safe-haven yen, against
which the dollar fell 0.3 percent to 101.255 yen, its
lowest this month. The euro dropped 0.5 percent to 137.84 yen
, its lowest since June 16.
Portuguese bond yields rose while shares in
Lisbon fell after shares and bonds of the chief shareholder in
Banco Espirito Santo were suspended over "material
difficulties" at its parent company ESI.
Italy's benchmark stock index fell 2.4 percent
after data showed Italian industrial output posted its steepest
monthly decline since November 2012, casting doubts over the
country's economic recovery.
Worries about BES and Italy's economy reminded investors the
region's debt problems were far from over.
"Concerns about Banco Espirito are causing a bit of risk-off
trade," said Alvin Tan, currency strategist at Societe Generale.
The euro shed 0.2 percent to $1.3615 after rising to
a one-week high of $1.3649 when the Fed minutes were released.
The minutes confirmed the U.S. central bank's monthly bond
purchases would probably end in October and showed policymakers
had debated the complexities of unwinding a stimulus programme
that has flooded the financial system with over $2 trillion.
The uncertain outlook for the timing of a first Fed rate
move has kept a lid on Treasury yields, with the two-year yield
hovering near three-week lows at around 0.45 percent.
"Anyone expecting anything hawkish from the Fed minutes
would be disappointed," said Jeremy Stretch, head of currency
strategy at CIBC World Markets. "Unless Treasury yields start
moving up, to reflect the better data from the United States, it
would be a rather frustrating time for dollar bulls."
Swedish consumer prices rose 0.2 percent in June from the
previous month and were up 0.2 percent from the same month last
year, easing some concerns about deflationary pressures in the
The euro fell to 9.2127 crowns from around
9.2690 crowns before the inflation data was released, down 0.5
percent on the day. The crown had hit a 3-1/2 year low against
the euro last week after the Riksbank surprised investors by
cutting its benchmark repo rate by 50 basis points.
"We would recommend investors to fade into the Swedish
crown's rally as the central bank is unlikely to tolerate any
additional tightening that can come through the currency's
rise," UBS currency strategist Geoff Yu said.
The Australian dollar shed 0.5 percent to $0.9367
after figures showed unemployment rose to 6.0 percent last
month. Putting further pressure on the Australian currency,
trade data from China, the country's largest trading partner,
showed exports grew less than expected in June.
(Editing by Catherine Evans)