A weaker-than-expected rebound by the Japanese economy and a steep fall by Chinese shares translated into gains for the yen and the U.S. dollar, with both currencies enjoying safe-haven appeal as equity markets added to recent losses, strategists said. Japanese GDP grew by a slightly weaker-than-expected 0.9% in the second quarter compared to the first three months of the year amid increased exports and a rise in private spending. Worries remained about business spending, analysts said, which dropped for a fifth consecutive quarter as companies delayed capital expenditures on new plants and equipment. "The yen has continued last week's pattern of outperforming the major currencies including the U.S. dollar," wrote strategists at Brown Brothers Harriman. "Today's slightly worse than expected Japanese [second-quarter] GDP failed to limit yen gains as markets focused on falling equity markets, particularly China's equity meltdown." The dollar fell to 94.47 yen, down from 94.86 yen in North American trade late Friday. The euro fell to its lowest level versus the Japanese currency in more than two weeks and recently changed hands at 132.87 yen, a loss of 1.1% on the day. Chinese stocks suffered their worst fall since November, hammered by falling commodity prices and concerns over liquidity-tightening measures. The Shanghai Composite Index dropped 5.8% to 2,830.63. Shenzhen's main share index plunged 6.6%. Japan's Nikkei ended down 3.1% despite gross domestic product data that confirmed the world's second-largest economy pulled out of recession in the April-June quarter. European shares were broadly lower and U.S. stock index futures pointed to a lower opening for Wall Street. The euro traded at $1.4058 versus the dollar, down from $1.4169 late Friday, and the British pound bought $1.6288, down from $1.6494. The dollar index (DXY), which measures the U.S. unit against a basket of six major currencies, rose to 79.439, compared to 78.906 late Friday. Meanwhile, falling commodity prices and a drop in government bond yields put pressure on high-yielding currencies, such as the Australian dollar. Nymex oil futures were $1.61 lower at $65.90 a barrel in electronic trade. The Aussie fell 1.9% versus the U.S. unit to trade at 81.65 U.S. cents. "High-yielding commodity currencies will remain under selling pressure as global bond yields come down," wrote strategists at BNP Paribas. Bond yields had been driven higher by inflation expectations, but are set to fall as output gaps, the difference between actual and potential economic growth, continue to rise, they wrote. Subdued U.S. inflation data and indications from last week's University of Michigan consumer confidence figures that consumers are reducing price expectations have weighed on bond yields, they said. Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=OSCeAQXZlb%2Bm%2F01WSAJ%2FWA%3D%3D. You can use this link on the day this article is published and the following day.

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