The yen traded near a five-week high against the dollar as signs the global economic recovery is slowing boosted demand for Japan’s currency as a refuge. The yen was also close to a two-week high against the euro as reports showed Japan’s industrial production fell while.

Its jobless rate rose. A report due today is forecast to show U.S. consumer confidence declined. The euro traded near the lowest level since November 2008 against the pound on speculation European banks will have to borrow at higher interest rates when they roll over loans that expire this week.

“As economic data worsens I’m not sure if policymakers will be able to strike a balance between economic growth and austerity,” said Kazuyuki Kato, treasury department manager in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second- largest publicly traded lender by assets. “The bias is for the yen to advance.”

The yen was at 89.38 per dollar as of 10:20 a.m. in Tokyo, from 89.37 yesterday in New York when it touched 89.07, the strongest since May 21. Japan’s currency traded at 109.84 per euro from 109.72. It touched 109.54 per euro on June 24, the highest level since June 10.

The euro fetched $1.2287 from $1.2277. The currency was at 81.27 pence in Tokyo trading after touching 81.21 pence yesterday, the lowest level since November 2008. The euro has fallen 2.2 percent in June against Japan’s currency, declining for a third month.

The yen tends to strengthen during economic and financial turmoil because Japan’s trade surplus makes it less reliant on foreign funding.

Japan’s factory output fell 0.1 percent in May after rising 1.3 percent in April, the Trade Ministry reported today. The nation’s jobless rate rose to 5.2 percent last month from 5.1 percent in April, the government reported.

U.S. Outlook

The Conference Board’s confidence index in the U.S. fell to 62.5 this month from 63.3 in May, according to a Bloomberg survey before the New York-based group’s report today.

“Worries over the durability of the U.S. rebound seem to be on the rise,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “It’s negative for the dollar.”

Ten-year Treasuries rallied yesterday, pushing yields to the lowest in more than a year. Advanced economies at a Group of 20 meeting in Toronto over the weekend agreed to halve deficits by 2013 while providing stimulus to support economic recovery.

‘Higher Borrowing Costs’

The euro has lost 10 percent this year, based on Bloomberg Correlation-Weighted Indexes. The dollar is up 6.5 percent, and the yen has advanced 11 percent.

The euro headed for a third quarterly drop against the dollar. Europe’s banks owe 442 billion euros ($543 billion) of 12-month cash to the European Central Bank on July 1.

The ECB has reinstated unlimited three-month lending to provide banks with access to cash. The Bank for International Settlements said yesterday that European banks may struggle to refinance their debt if investor sentiment remains negative.

“There are concerns that banks may have to pay higher borrowing costs at funding renewal, possibly hurting their profitability,” said Yuji Saito, director of the foreign- exchange department at Credit Agricole Corporate and Investment Bank in Tokyo. “It’s negative for the euro.”

The euro has fallen 9 percent against the dollar since March 31, the most since the third quarter of 2008.

‘Practically Disappeared’

Switzerland’s franc traded near a record high against the euro on speculation the nation’s central bank will refrain from intervening in foreign-exchange markets to sell the currency amid signs of decelerating deflation.

Deflationary tensions have “practically disappeared,” Swiss National Bank Governor Board member Jean-Pierre Danthine said in an interview with L’Agefi published yesterday. The SNB “would be able to react very quickly” if there was a need to increase interest rates, he told the newspaper.

“These comments suggested the SNB wasn’t likely to intervene against a strengthening in the franc,” John Kyriakopoulos, head of currency strategy in Sydney at National Australia Bank Ltd., wrote in research today. “The franc received a boost from” the SNB official’s remarks, he said.

The franc rose as much as 1.4 percent to 1.3329 against the euro yesterday, the strongest level since the 16-nation common currency’s 1999 debut, and was at 1.3353 today. That pushed its gains this quarter to 6.6 percent.

The New Zealand dollar weakened after a government report showed home-building approvals declined in May. Permits declined 9.6 percent from April when they gained a revised 8.4 percent, Statistics New Zealand said, citing seasonally adjusted figures. New Zealand’s dollar slipped 0.2 percent to 70.66 cents, and dropped 0.2 percent to 63.16 yen. With assistance from Candice Zachariahs in Sydney. Editors: Rocky Swift, Nate Hosoda.