By Yasuhiko Seki and Ron Harui Oct. 22 (Bloomberg) -- The dollar rose after China’s economic growth trailed some economists’ estimates and speculation mounted it will pare stimulus spending, spurring demand for the greenback as a refuge. The dollar gained against 15 of its 16 most-traded counterparts after China announced third quarter production figures and said inflationary expectations are increasing. The Australian and New Zealand dollars retreated from the strongest in more than 14 months as Asian stocks declined, curbing demand for higher-yielding assets. “The Chinese data simply met the market’s consensus view and failed to offer any positive surprise,” said Tomohiro Nishida, a dealer in Tokyo at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest banking group. “Thus it triggered selling of the euro and other high-yield currencies.” The dollar advanced to $1.4988 per euro at 6:56 a.m. in London from $1.5016 in New York yesterday when it touched $1.5046, the weakest level since August 2008. The U.S. currency was at $1.6622 per pound from $1.6608 yesterday when it slipped to as low as $1.6637, the lowest level since Sept. 15. The yen fell to 91.37 per dollar from 90.97, and traded at 136.69 per euro from 136.61. Australia’s currency fell 0.6 percent to 92.39 cents from 92.92 cents yesterday in New York, when it climbed to 93.29 cents, the most since August 2008. New Zealand’s dollar slid to 75.41 cents from 76.05 cents yesterday, when it advanced to 76.35 cents, the strongest since July 2008. The Nikkei 225 Stock Average dropped 0.7 percent and the MSCI Asia-Pacific Index of regional shares slid 1.1 percent. China’s gross domestic product expanded 8.9 percent in the third quarter, the nation’s statistics bureau said today. The median estimate among 34 economists surveyed by Bloomberg was for a 9 percent expansion. Inflation Prospects “The markets were anticipating a stronger GDP figure, so they were disappointed,” said Masashi Kurabe, head of currency sales and trading in Hong Kong at Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s largest publicly traded bank. “This caused some buying back of the dollar and the yen.” Inflationary expectations are increasing as prices rise month-on-month, statistics bureau spokesman Li Xiaochao said at a press briefing in Beijing. The government is paying “close attention” to the prospect of inflation, Li said. The dollar tends to gain in times of economic and financial turmoil due to its status as the world’s main reserve currency. Ifo Index Losses of the euro were tempered before a report that is forecast to show German business confidence improved. The Ifo institute’s business climate index, based on a survey of 7,000 executives, climbed to 92 in October from 91.3 the previous month, according to a separate survey. The Munich- based institute will release the report tomorrow. European Central Bank council member Erkki Liikanen said on Finland’s YLE Radio Suomi this week the 16-nation euro-area economy is no longer weakening. “The euro-zone’s economy appears to be recovering more quickly than what we’re seeing in the U.S. and Japan,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “The euro will likely gain further.” Won Falls Traders maintained bets the ECB will keep its benchmark interest rate at 1 percent until the end of the first quarter next year. The implied yield on the three-month Euribor futures contract for March 2010 delivery was 1.07 percent yesterday, little changed from Oct. 20. The South Korean won declined for a second day against the dollar after Yonhap News said, citing government officials it didn’t identify, that South Korea is studying measures to reduce currency volatility. Those steps may include caps on the amount of foreign-currency loans that Korean branches of overseas banks can take out from their parent companies, Yonhap said. “Upside in the won to the end of the year is limited because of the government,” said Dariusz Kowalczyk, chief investment strategist at SJS Markets Ltd. in Hong Kong. The won fell 1 percent to 1,190.47 per dollar. The currency reached 1,155.05 on Oct. 15, the strongest level since September 2008. To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net

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