By Matthew Brown and Yoshiaki Nohara Nov. 17 (Bloomberg) -- The yen rose after stock markets fell and International Monetary Fund Managing Director Dominique Strauss-Kahn said the global economic recovery may be sluggish, stoking demand for the Japanese currency as a refuge. The dollar advanced against 10 of its 16 most-traded counterparts after Federal Reserve Chairman Ben S. Bernanke said yesterday central bank policy will ensure that the “dollar is strong.” Australia’s dollar fell from near the highest level in 15 months after minutes from the nation’s central bank’s most recent meeting cast doubt on a third-straight increase in key lending rates. “Stock markets, including the Nikkei are down, so the yen is up,” said Neil Mellor, a currency strategist in London at Bank of New York Mellon Corp., referring to the Nikkei 225 Stock Average. “It’s a risk-off day, which is seeing the euro consolidate against the dollar.” The yen strengthened 0.4 percent to 132.82 per euro as of 10:18 a.m. in London, and was little changed against the dollar at 89.04 yen. The dollar strengthened 0.4 percent to $1.4915 versus the euro. The Dollar Index, which tracks the greenback against currencies of six trading partners, rose 0.4 percent. The Nikkei 225 slid 0.6 percent, and the MSCI World Index dropped 0.3 percent. Futures on the Standard & Poor’s 500 Index slipped 0.1 percent. The global economy is unlikely to face a “double dip,” even as the recovery is likely to be slow, Strauss-Kahn said at a briefing today in Beijing. Yuan Flexibility President Barack Obama said he emphasized to Chinese President Hu Jintao the need for China to keep moving toward a more market-based valuation for the yuan. “I was pleased to note the Chinese commitment made in past statements to move toward a more market-oriented exchange rate over time,” Obama said during a joint appearance with Hu after a meeting in Beijing today. Obama said he noted that “doing so based on economic fundamentals would make an essential contribution to the global rebalancing effort.” China’s central bank last week said foreign-exchange policy will take into account global capital flows and changes in major currencies, and scrapped language in a previous report to keep the yuan “basically stable.” The Chinese economy expanded by 8.9 percent in the third quarter from a year earlier. The yuan traded at 6.8266 per dollar, from 6.8269 yesterday. It is little changed since July 2008, the end of a three-year period during which it was allowed to appreciate about 19 percent against the dollar. ‘Open Question’ Australia’s central bank said the pace of interest-rate increases is an “open question” as it balances the risk of keeping borrowing costs too low against an economy that may cool as government stimulus abates. “If economic conditions evolved as expected, further gradual adjustment in the cash rate would most likely be appropriate over time,” officials said in minutes released today in Sydney of their Nov. 3 meeting, at which they raised the overnight cash rate target to 3.5 percent. Australia’s dollar fell to 92.82 U.S. cents, from 93.69 cents yesterday, when it reached 94.06 cents, the strongest level since Aug. 1, 2008. The pound strengthened to a two-month high against the euro after Bank of England policy maker Andrew Sentance said Britain is returning to growth. The U.K. currency extended gains after a report from the Office for National Statistics showed today that inflation rose for the first time in eight months. The Sentance speech “added to the positive bias in sterling,” said Henrik Gullberg, a currency strategist in London at Deutsche Bank AG. “The data generally has been very strong.” To contact the reporters on this story: Matthew Brown in London at mbrown42@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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