By Ye Xie and Matt Townsend Oct. 29 (Bloomberg) -- The dollar and yen declined against most of their major counterparts as a government report showed the U.S. economy grew in the third quarter more than economists forecast, spurring demand for higher-yielding assets. The greenback dropped against the euro for the first time in five days and the yen retreated from a two-week high. The pound rose for a fourth day against the dollar as U.K. mortgage approvals climbed to highest level in 18 months. “Risk is back on,” said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon Corp., the world’s largest custodial bank. “This was a positive report. It should be positive for the stock market and negative for the dollar.” The dollar slid 0.5 percent to $1.4786 per euro at 8:56 a.m. in New York, from $1.4706 yesterday. The yen declined 1.1 percent to 134.94 per euro, from 133.43. It earlier reached 132.81, the strongest level since Oct. 14. Japan’s currency weakened 0.6 percent to 91.26 per dollar, from 90.75. U.S. gross domestic product grew at a 3.5 percent annual pace in the third quarter, after shrinking in the previous four periods, the Commerce Department reported today. The median forecast of 79 economists in a Bloomberg survey was for an increase of 3.2 percent. Economists at Goldman Sachs Group Inc. cut their forecast yesterday for economic growth to 2.7 percent from 3 percent after reports indicated inventories would extend their drop. U.S. Labor Market The number of Americans receiving jobless benefits declined by 148,000 to 5.8 million in the week ended Oct. 17, the lowest since March 21 and biggest weekly drop since July, Labor Department figures showed today. Initial jobless claims fell by 1,000 to 530,000 in the week ended Oct. 24, from 531,000 the prior week. Deutsche Bank AG, Germany’s biggest bank, tripled net income in the third quarter and said improved capital markets and investors’ increased appetite for risk should bolster securities firms in the fourth quarter. Standard & Poor’s 500 Index futures climbed 1 percent. Europe’s Dow Jones Stoxx 600 Index added 0.9 percent. The dollar dropped 0.7 percent versus the euro in October in its fourth monthly decline, the longest losing streak since 2004. The yen fell 1.8 percent against the euro this month and 1.1 percent versus the dollar. The pound rose 0.5 percent to $1.6458 after the Bank of England said lenders granted 56,215 home loans last month, compared with 52,970 in August. The median of 20 forecasts in a Bloomberg survey was for 53,600. The pound strengthened 0.3 percent to 89.56 pence per euro and earlier advanced to 89.37, the strongest level since Sept. 17. Norway’s Krone Norway’s krone climbed for the first time in five days against the dollar, appreciating 0.6 percent to 5.7136. Norges Bank raised the nation’s overnight deposit rate to 1.5 percent yesterday, becoming the first European central bank to reverse its easing cycle since the credit crisis began in 2007. The Australian dollar rose 0.8 percent to 90.39 U.S. cents today, from 89.71 cents yesterday. It dropped to 89.44 cents earlier, the weakest level since Oct. 8. The Reserve Bank of Australia was the first central bank among the Group of 20 countries to increase borrowing costs since the global crisis began, raising its overnight cash rate target by a quarter-percentage point to 3.25 percent on Oct. 6. Higher rates boost the appeal of so-called carry trades, in which investors borrow in low-yielding currencies such as the yen to invest elsewhere. The risk is that currency moves may erase gains. Benchmark rates are 0.1 percent in Japan and a range of zero to 0.25 percent in the U.S. The euro earlier remained higher against the yen and dollar after a report showed German unemployment unexpectedly fell in October to 8.1 percent. The nation’s economy, the euro region’s biggest, returned to growth in the second quarter. The euro “remains in an uptrend,” Greg Gibbs, a foreign- exchange strategist in Sydney at Royal Bank of Scotland Group Plc, wrote today in a report. It’s “no longer a compelling sell, and medium-term considerations favor buying dips.”

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