Yen Rises as Bernanke Damps Recovery Optimism; Stocks Decline

July 22 (Bloomberg) -- The yen approached a seven-month high against the dollar and Asian stocks fell after Federal Reserve Chairman Ben S. Bernanke said the outlook for the world’s largest economy remains “unusually uncertain.”

The MSCI Asia Pacific Index of shares was 0.2 percent lower at 115.41 as of 11:35 a.m. in Tokyo. Japanese exporters led the Nikkei 225 Stock Average’s slide to a three-week low as the yen strengthened against all 16 major currencies. The yield on the two-year Treasury reached a record-low 0.55 percent, while futures on the Standard & Poor’s 500 Index were little changed.

“Markets hate uncertainty and the reaction in global markets is to sell risky assets,” said Khoon Goh, head of market economics and strategy at ANZ National Bank Ltd. in Wellington. “The yen is likely to benefit from risk aversion.”

Bernanke said the Fed is prepared “to take further policy actions as needed” to lift growth in U.S., commenting before reports today are forecast to show initial jobless claims increased and existing home sales dropped. The euro fell to the lowest level in more than a week against the yen before results of European banks’ stress tests are revealed tomorrow.

The yen touched 86.57 per dollar before trading at 86.58, from 87.05 late yesterday in New York. It reached 86.27 on July 16, the strongest level since Dec. 1. The Nikkei 225 dropped 0.7 percent to 9,215.30, sliding for a fifth day.

Exporters Slide

Canon Inc., a camera maker that gets 27 percent of sales in the Americas, fell 1.2 percent to 3,315 yen. Honda Motor Co., which generates 42 percent of revenue in North America, lost 1.1 percent to 2,572 yen. Samsung Electronics Co., Asia’s biggest maker of chips, flat screens and mobile phones, dropped 0.9 percent to 810,000 won in Seoul.

“The Bernanke testimony disappointed people,” said Mitsushige Akino, who oversees $450 million Tokyo at Ichiyoshi Investment Management Co.

The S&P 500 Index dropped 1.3 percent yesterday after Bernanke delivered his semiannual report on monetary policy to the Senate Banking Committee. He testifies to the House Financial Services Committee today.

Initial jobless claims in the U.S. rose to 445,000 last week from 429,000 the prior period, according to the median forecast of economists surveyed by Bloomberg before today’s Labor Department report. Existing home sales dropped 9.9 percent in June, the most this year, a separate survey showed ahead of a release from the National Association of Realtors.

Copper led declines among metals prices on concern the global economic recovery is losing steam, with the three-month futures contract sliding as much as 1.6 percent to $6,752 a metric ton. The price of the metal jumped 3.3 percent yesterday, the most in two months.

“Market sentiment today has been affected by Bernanke’s comments,” Liu Xu, an analyst at China International Futures Co., said from Shenzhen. “It’s a good excuse to take profit.”