The pound fell and the yen advanced on speculation spreading credit
market losses at banks will result in slower economic growth and
discourage policy makers from raising interest rates.
Sterling
dropped the most in more than three weeks versus the dollar after
Bradford & Bingley Plc, the U.K.'s biggest mortgage lender to
landlords, said it will sell shares at a 33 percent discount. The yen
rose against all of the major currencies as a decline in European and
U.S. stocks eroded demand for higher-yielding assets funded in Japan.
``Risk aversion is filtering into the market again,'' said Matthew
Strauss, a senior currency strategist in Toronto at RBC Capital Markets
Inc., a unit of Canada's biggest bank by assets. ``Even though the
worst of the financial crisis may be behind us, the recovery won't be a
smooth ride. It's clearly weighing on the pound.''
The pound weakened after Bradford & Bingley Chief Executive Officer
Stephen Crawshaw quit yesterday, citing health reasons. TPG Inc., a
leveraged buyout firm, is in talks to buy a 20 percent stake in the
mortgage lender. It plans to raise an additional 250 million pounds
($490 million) from shareholders.
The Standard & Poor's 500 Index fell for the first time in five
days, dropping 1.1 percent, after Wachovia Corp. ousted Kennedy
Thompson as chief executive officer. The Dow Jones Stoxx 600 Index of
European stocks decreased 1 percent.
``People are worried about banks' ability to raise the capital they
need,'' said Steve Pearson, chief currency strategist at HBOS Treasury
Services Plc in London. Japan's currency may rise to 203 against the
pound and 103 per dollar this week, he forecast.
The U.S. currency rose earlier against the euro as crude oil fell by as
much as 1.7 percent to $125.22 a barrel, easing concern high commodity
prices will reduce U.S. consumer spending. Crude reached a record high
of $135.09 on May 22.