LONDON, Oct 15: The dollar hit a four-month high against the yen and a one-week peak against the euro and Swiss franc on Tuesday as better than expected US corporate earnings raised hopes that Wall Street could extend its winning streak.

Healthy gains for Tokyo stocks and news that bankruptcies in Japan fell in September, meanwhile, allowed the yen to recover its poise after hitting a three-year low against the euro in Asia.

Dealers said equity markets’ resilience in the face of last weekend’s bomb blasts in Bali had encouraged investors to unwind safe-haven trades, lifting the dollar almost one percent to 1.4938 Swiss francs and half a percent to $0.9822 per euro and 124.90 yen.

Investors are encouraged that the Bali bombs did not upset markets too much and we are seeing an unwinding of safe-haven plays, said Shahab Jalinoos, currency strategist at UBS Warburg.

The yen still looks very vulnerable to further losses.

Japan’s currency has lost ground across the board in the last two months as investors have fretted that radical plans to reform the country’s banking system could pull the rug from under indebted borrowers and trigger a wave of bankruptcies.

The yen fell beyond 123 per euro in Asia for the first time in over three years. But it recovered its footing after research firm Teikoku Databank said bankruptcies in Japan declined in September for a second straight month.

The research firm warned however that the number of bankruptcies could soar later in the year as firms felt the effects of tough bank reforms and the Nikkei stock average’s recent tumble to 19-year lows.

A raft of earnings releases on Tuesday will be followed by results from computer giant International Business Machines Corp on Wednesday and software company Microsoft Corp on Thursday.

In Germany, economic research institute ZEW releases its economic expectations index for October. This is viewed by many as forerunner to the respected Ifo institute’s economic indicator which comes out later in the month.

The ZEW index is expected to fall again this month to 31.7 after slipping to 39.5 in September.

Continued wrangling over the euro zone’s fiscal rulebook — the Stability and Growth Pact — appeared to have little impact on the single currency.

France on Tuesday called for flexibility in the way deficit reduction rules are interpteted and criticised the European Central Bank for not cutting interest rates.—Reuters