April 13 (Bloomberg) - The yen fell against most of its major counterparts on speculation governments’ efforts to end the global recession will encourage investors to buy higher- yielding assets funded by Japan’s currency.

The Australian dollar rose to a six-month high versus the yen while New Zealand’s currency gained versus the greenback on speculation China is considering additional measures to boost domestic consumption, bolstering the outlook for Asia-Pacific growth. Thailand’s baht fell to its weakest level this month as anti-government protesters fought police.

“There’s some optimism in the markets, which supported yen selling,” said Hidetoshi Yanagihara, senior currency trader at Mizuho Corporate Bank in New York.

The yen declined 1.3 percent to 133.85 per euro at 2:39 p.m. in New York, from 132.18 on April 10. Japan’s currency traded at 100.10 versus the greenback, compared with 100.24. The euro increased 1.4 percent to $1.3370 from $1.3189 on April 10, when it reached $1.3090, the lowest since March 18.

The Dollar Index, which the ICE uses to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, fell 1.4 percent today to 84.590.

The euro rose against the dollar today as some investors “covered their shorts,” according to Yanagihara. A short position is a bet a currency will decline.

The gain of the euro accelerated after it hit stop losses at about $1.3350, according to Matthew Kassel, director of proprietary trading at ING Financial Markets LLC in New York. Traders use stop losses, or pre-set orders, to buy or sell a security in case a bet goes against them.

Volume of Trading

The Easter Monday holiday in Asia and Europe reduced the volume of trading today, he added.

“Things have just drifted higher on very light volume,” Kassel said. “I suspect that we will see the euro-dollar back down toward $1.33 before the session ends and back to $1.3255 into Asia.”

The Aussie dollar gained 1.3 percent to 72.92 U.S. cents, while New Zealand’s currency increased 1.4 percent to 59.15 on speculation China’s economic-stimulus measures will spur demand for exports from the South Pacific countries.

China’s government will issue some “guideline” policies and continue to use fiscal and taxation measures to spur an economic expansion, the official China Securities Journal reported today, citing Gao Huiqing, a researcher at the State Information Center, as saying on April 11.

Prime Minister Taro Aso of Japan announced a record 15.4 trillion yen ($153 billion) stimulus package on April 10, his third since taking office in September, bringing total spending to 25 trillion yen.

Yen’s Decline

Japan’s currency dropped versus most of its 16 major counterparts tracked by Bloomberg on speculation investors will resume borrowing in Japan and use the proceeds to buy higher- yielding fixed-income assets elsewhere. The yen slid 1.3 percent to 73.05 versus the Australian dollar after touching 73.18, the weakest level since Oct. 14. The yen lost 1.4 percent to 59.25 per New Zealand dollar.

“The yen as a funding currency for carry trades or investment opportunities is going to reassert itself,” Jesper Koll, Tokyo-based chief executive officer of hedge fund adviser TRJ Tantallon Research Japan, said in an interview on Bloomberg Television. “The yen ought to be weakening, particularly against the Australian and New Zealand dollars.”

In carry trades, investors get funds in a country with relatively low borrowing costs and invest in another with higher interest rates. Japan’s target lending rate of 0.1 percent compares with 3 percent in Australia and New Zealand.

Currency Volatility

Foreign-exchange volatility implied by option prices, a measure of risk, was close to a six-month low, a JPMorgan Chase & Co. index shows. Options traders see currencies of the Group of Seven industrialized nations fluctuating by an annualized 15 percent in the next three months, compared with 27 percent on Oct. 24, the most since the index started in 1992. Lower volatility makes carry trades attractive by making profit from rate differentials easier to predict.

The yen fell 1.9 percent versus the Australian dollar on April 9, when Wells Fargo & Co., the second-largest U.S. home lender, said first-quarter net income surged 50 percent because of “strong” revenue from Wachovia Corp., which it acquired last year. Goldman Sachs Group Inc. will release its first- quarter results tomorrow, and JPMorgan Chase & Co. will report its first-quarter earnings April 16.

‘Likely to Lose’

“We are in a phase where the yen looks more likely to lose from any supposed good risk-appetite news than benefit from risk aversion,” wrote Alan Ruskin, head of international currency strategy in North America at RBS Securities Inc. in Greenwich, Connecticut, in a research note to clients today.

The Thai baht extended its loss against the dollar in offshore trading this year to 2.7 percent as soldiers battled to restore order to Bangkok and Prime Minister Abhisit Vejjajiva declared a state of emergency. Protesters are calling for the resignation of Abhisit, 44, who canceled a weekend summit of Asian leaders after a crowd of 1,000 stormed the seaside venue of Pattaya. The currency fell 0.7 percent to 35.70 versus the dollar, the weakest level since March 19.

To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Kim-Mai Cutler in London at kcutler@bloomberg.net