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Yen under pressure after Wall Street rally

Tokyo - The yen faced selling pressure on Thursday as investors' fears over China's economy began to ease, and as equity markets rebounded following hints the US Federal Reserve may not lift rates next month.

In Tokyo trading, the dollar bought ¥119.97 after crossing the ¥120 mark in earlier trading, and nearly flat against ¥119.98 in New York.

The euro was stronger at ¥136.14 from ¥135.72. The 19-nation euro fetched $1.1348, up from $1.1312 in US trade.

Fears over slowing growth in China had sent investors fleeing to the Japanese currency - a safe haven during times of turmoil - with the dollar tumbling to ¥116.18 earlier this week, its lowest level since February.

Chinese officials have moved to calm markets and took measures, including cutting interest rates, to support the world's number two economy.

"The rebound in US stocks has spurred a reversal of the flight to quality we've been seeing," pushing the yen lower, Yasuhiro Kaizaki, vice president for global markets at Sumitomo Mitsui Trust Bank, told Bloomberg News.

"The trend for a gradual weakening of the yen is set to continue after a short-term correction."

Bank of Japan governor Haruhiko Kuroda said the yen's sudden rise had been "corrected", as he held out the possibility of more monetary easing measures to reach a 2.0% inflation target.

Further stimulus would tend to weaken the Japanese currency.

"At this stage, we have no concrete proposal for further accommodation. But if necessary, we will certainly make (an...) adjustment," Kuroda said in a speech delivered in New York.

Japan's top central banker also said the Chinese economy still has "robust" growth prospects, and some analysts have been "too pessimistic" about the country, Kyodo News agency quoted him as saying.

Wild market volatility and worries over the impact of a China slowdown on global growth has thrown into doubt a widely expected Fed rate hike in September.

On Wednesday, William Dudley, the head of the New York branch of the Fed and one of the most influential members of its monetary policy board, said the case for the long-awaited rise in September had weakened. A rate rise is a plus for the greenback.

However, the outlook for the world's top economy got a lift from better-than-expected official US manufacturing report, showing orders for durable goods - products expected to last at least three years - jumped 2.0% in July.

The dollar was mixed against other Asia-Pacific currencies.

It rose to Sg$1.4034 from Sg$1.4005 on Wednesday, to 46.70 Philippine pesos from 46.62 pesos, and to 35.65 Thai baht from 35.58 baht.

The greenback weakened to 1 184.44 South Korean won from 1 186.20 won, to 66.02 Indian rupees from 66.15 rupees, to Tw$32.35 from Tw$32.40 and to 14 066 Indonesian rupiah from 14 115 rupiah.

The Australian dollar slipped to 71.13 US cents from 71.19c, while the Chinese yuan fetched ¥18.68 against ¥18.67.

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