* Front runner in Japan's election calls for weaker yen
* Euro inches up vs dollar, helped by yen selling
* IMF suggests Europe do more to held Greece
By Julie Haviv and Gertrude Chavez-Dreyfuss
NEW YORK, Nov 15 The yen lost more than 1
percent of its value against the dollar for a second straight
session on Thursday, hitting its lowest in nearly seven months
on expectations the Bank of Japan will engage in more aggressive
The euro, meanwhile, rose for a second day against the
dollar as investors continued to the cover their short positions
after five days of losses. The euro's gains came despite data
showing the euro zone slid into its second recession since 2009
in the third quarter of 2012.
The dollar, on the other hand, posted its largest gain
against the yen since mid-September after Shinzo Abe, the head
of Japan's Liberal Democratic Party and front runner in next
month's election, said he wants the Bank of Japan to consider
sub-zero interest rates.
The euro also rallied to a two-week high against the yen.
Abe, pushing the central bank for bold easing steps, told
reporters he wants to work with the BOJ to reverse the yen's
strength, which he said hurts the competitiveness of small
"The catalyst has clearly been politics, including a further
step up in political pressure on the BoJ to ease aggressively,"
said Jens Nordvig, global head of G10 strategy at Nomura
Securities in New York.
The dollar rose to 81.45 yen, its highest level since
late April. It last traded at 81.19, up 1.2 percent on the day.
That followed a gain of 1.1 percent the previous day.
Nomura's Nordvig said the "new BoJ" theme, and changing
long-term flows, are key reasons his firm forecasts dollar/yen
at 85 in early 2013.
However, Samarjit Shankar, managing director of global
strategy at custody bank BNY Mellon, said its flow indicators
suggested the yen was modestly bought by institutional investors
on Thursday for the first time in several sessions after the
currency's sharp losses.
"These fresh modest inflows, if sustained, suggest the
ascent of dollar/yen and euro/yen thus far this week may be
close to ending for now," said Shankar.
Nevertheless, the Bank of Japan is expected to hold its fire
at a meeting of its policy board next week and may also defy
market expectations for action in December.
The euro hit a high of 103.98 yen, the highest
since Nov. 1 and last traded at 103.67, up 1.4
percent, as investors unwound short euro positions taken earlier
this week on concerns about when Greece will receive its next
tranche of financial aid.
The International Monetary Fund has done what it can to help
Greece reach debt sustainability, an IMF spokesman said, leaving
the window open for further action by the indebted country's
The euro last traded up 0.4 percent at $1.2782,
recovering from Tuesday's two-month low of $1.2660. Traders
cited buying by European corporates earlier in the session that
helped lift the euro.
The single currency, however, looked vulnerable, with
concerns about slowing growth in the euro zone and uncertainty
over aid for Greece and Spain seen by analysts as likely to cap
But some analysts said investors were wary of selling the
euro heavily in case policymakers surprised markets with
decisive action to tackle the debt crisis.
BNY's Shankar said overall there is still a strong
undercurrent of risk aversion in the market. Thursday's weak
U.S. economic numbers have heightened that sentiment.
The number of Americans filing new claims for jobless
benefits surged last week to a 1 1/2-year high. Separate data
showed U.S. consumer prices rose in October and a gauge of
manufacturing in New York state showed activity slowed in
November for a fourth straight month.
Meanwhile, factory-sector sentiment dropped in the U.S.
"Riskier positions are small, larger positions are being
pared, and nimbleness is a virtue amidst growing uncertainties
relating to the Eurozone crisis, U.S. fiscal cliff, renewed
tensions in the Middle East and global growth moderation," said