* 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 (Reuters) - 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 Australian dollar.
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 fears?”
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 month.
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)