By Oliver Biggadike and Lukanyo Mnyanda Dec. 1 (Bloomberg) -- The dollar fell against most major currencies as pending home resales unexpectedly rose in October, and Dubai said its debt talks are “constructive,” adding to demand for higher-yielding assets. The greenback declined for a second day against the euro as stock markets in Germany and France erased yesterday’s decline. Australia’s dollar rose against the U.S. currency after the central bank raised interest rates for a third straight month. The yen fell against all of its 16 most-traded peers after Japan’s policy makers said they are ready to add money to the financial system to support the economy. “The Dubai effect is fading,” said Sebastien Galy, a currency strategist at BNP Paribas SA in New York. “Equities have had time to rally, and the foreign-exchange market is basically following.” The dollar weakened 0.5 percent to $1.5081 per euro at 10:08 a.m. in New York, from $1.5005 yesterday. The U.S. currency lost 1.9 percent in November in its fifth consecutive monthly drop, the longest stretch of declines since December 2004. The dollar climbed 0.4 percent to 86.74 yen today, from 86.41 yesterday. Japan’s currency weakened 0.9 percent to 130.78 per euro, from 129.64. Government-related Dubai World said it began talks with banks to restructure $26 billion of debt. The holding company is seeking to delay payments on less than half its $59 billion of obligations, easing concern a potential default may set back the global financial system’s recovery from the credit crisis. Stocks Climb European stocks rose, following gains in Asian equity markets, with the Dow Jones Stoxx 600 Index climbing 2 percent. The Standard & Poor’s 500 Index increased 1.1 percent. New Zealand’s dollar was the biggest winner versus the greenback among major currencies tracked by Bloomberg, increasing 1.4 percent to 72.60 U.S. cents. U.S. pending homes resales gained 3.7 percent in October, the National Association of Realtors reported today. The median forecast of 37 economists in a Bloomberg survey was for a decrease of 1 percent. HSBC Holdings Plc’s purchasing managers’ index for China rose in November to a seasonally adjusted 55.7, the highest reading since the survey’s first month in April 2004. The government’s gauge held at an 18-month high. Australia’s currency increased 0.6 percent to 92.14 U.S. cents after the Reserve Bank increased the overnight cash rate target to 3.75 percent today, from 3.50 percent. The currency earlier fell as the central bank said this year’s boosts in borrowing costs may curb inflation, prompting speculation the pace of increases may slow. Australian Outlook “Over the next couple of meetings there’s a pretty good chance they might actually pause and wait for the economic data before they tighten further,” Adarsh Sinha, a currency strategist at Barclays Capital in London, said in a Bloomberg Television interview. “They sounded a little bit dovish.” The yen slid 1.9 percent to 63.08 versus the New Zealand dollar after the Bank of Japan said it will provide three-month loans to commercial banks at an interest rate of 0.1 percent as it seeks to address falling prices and a strengthening currency. Governor Masaaki Shirakawa and his board kept the key overnight lending rate at 0.1 percent by a unanimous vote after today’s emergency meeting. Prime Minister Yukio Hatoyama’s government has stepped up calls on the Bank of Japan to prop up growth after declaring on Nov. 20 the economy was in deflation. The central bank introduced quantitative easing steps in March 2001 before suspending them in March 2006. Yen Versus Dollar The yen gained 4.3 percent against the dollar in November, helping to erode profits of exporters including Sony Corp. and Toyota Motor Corp. It reached a 14-year high of 84.83 versus the dollar on Nov. 27 partly on speculation the government won’t take action to stem its gains. “What is clear is that something has changed, they are getting concerned about the strength of the yen,” said Paul Mackel, a director of currency strategy at HSBC in London. The yen will depreciate to 100 per dollar at the end of the first quarter, Mackel said. The median of 41 predictions in a survey of analysts compiled by Bloomberg is for the currency to trade at 92 by the end of March. Japan hasn’t sold its currency since March 16, 2004, when it was at about 109 per dollar. The Bank of Japan, which carries out intervention measures on behalf of the Ministry of Finance, sold 14.8 trillion yen ($169 billion) in the first three months of 2004, after record sales of 20.4 trillion yen in 2003. Japan last bought the currency in 1998, purchasing 3.05 trillion yen as the rate weakened to 147.66. To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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