The yen rose against higher-yielding currencies and advanced the most in two weeks versus the dollar as stocks declined and the Bank of Japan said the nation’s deepest recession since World War II is easing.

Japan’s currency made the biggest gains against the Australian and New Zealand dollars and the Mexican peso as speculation the global economic crisis is far from over spurred investors to cut holdings of riskier assets. The greenback fell for a second day against the yen on concern the leaders of Brazil, Russia, India and China meeting today will call for less reliance on the dollar as the world’s reserve currency.

“Stocks are falling, indicating risk-aversion among investors,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker. “The yen is being bought.”

The yen climbed to 133.46 per euro as of 7:40 a.m. in London from 134.99 yesterday in New York. It earlier rose to 132.74, the strongest level since May 28. The yen advanced 1.5 percent to 96.35 per dollar, the biggest gain since May 29. Japan’s currency rose 1.6 percent to 60.76 against the New Zealand dollar, and strengthened 1.8 percent to 76.44 versus Australia’s currency.  Read the rest of this entry »