Yen slides to record low against euro

	Yen slides to record low against euro Reuters London: The yen slid to a record low versus the euro yesterday as news North Korea test-fired at least seven missiles deepened recent losses from expectations that Japanese interest rates would rise only gradually. The dollar benefited in a secondary reaction to North Korea's move, clawing back from an earlier one-month low against the euro in a wave of safe-haven buying. The euro was also pressured as retail sales in the single currency zone unexpectedly fell in May from April and grew little in annual terms. "The Korean issue is dominating today the market's first reaction is to sell yen, it's second is to buy safe-haven currencies like the dollar," Westpac currency strategist Geoff Kendrick said. "This story may continue for a fair chunk of today before traders start to focus on something else." The yen has been under pressure this week as investors expect the Bank of Japan to take its time raising interest rates. The yen fell to a low of 147.31 per euro, its lowest since the single currency was launched in 1999, before trimming losses to 146.68 by 1200 GMT. Against the dollar it was steady at 114.68 yen. A wave of safe-haven buying after the North Korean missile launches pushed the Swiss franc briefly to a fresh eight-year high against the yen, while gold rose by more than 1 per cent to a one-month high. The news also prompted a sell off in emerging market currencies, potentially supporting the US dollar. Nato said the launches posed a "serious threat" to the region and beyond. RBS analysts said in a research note that underlying yen weakness was already well established. "The expectation of a rate hike in July may moderate this, but government opposition to the hike remains voluble, and market pricing suggests risks for the yen remain to the downside, with a hike widely expected," RBS said. The euro was steady on the day at $1.2791, with earlier losses trimmed slightly. The European Union's statistics office said retail sales in the 12-country euro zone rose 0.8 per cent from May 2005 but fell 0.6 per cent month-on-month, dragged down mainly by Germany. A survey showed growth in the euro zone services economy hit a six-year high in June. INTEREST RATES End of an era? The Bank of Japan will likely end an era of zero interest rates and raise a key short-term interest rate for the first time in six years at its July 13-14 policy board meeting, sources close to the BoJ said. Unless new risk factors emerge, such as a plunge in Tokyo share prices, BoJ Governor Toshihiko Fukui will likely propose raising the key overnight call rate to 0.25 per cent from zero, several sources close to the central bank said. Many in the BoJ believe the central bank should maintain very accommodative monetary conditions even after ending zero interest rates, and the BoJ will probably stress that point when they decide to end the zero rate policy, they added.