LONDON, Nov 29: The yen fell back against other leading currencies on Friday after Japanese data released earlier pointed to a grim outlook for the world’s number two economy.

The dollar traded at 122.51 yen against 122.28 late on Thursday.

The single European currency fell to $0.9936 from 0.9947 late on Thursday in New York.

Neil Mackinnon, chief economist at ECU Group, a currency debt management firm, said Friday’s economic data made it increasingly clear Japanese authorities’ efforts to reignite the economy were meeting with little success.

They need to weaken the yen if there is to be much chance of breaking deflationary expectations, he argued.

A weaker yen would be expected to lift growth by boosting Japanese exports and ultimately increasing foreign demand for Japanese assets.

Japan’s industrial output unexpectedly fell 0.3pc in October from the previous month.

Figures released separately showed Japan’s jobless rate returned to a record high of 5.5 per cent in October while Japanese salaried household spending fell 0.7 per cent in October from a year earlier.

After an encouraging third quarter growth performance, it is back to the same old doom and gloom story for the Japanese economy, said CIBC World Markets economist Audrey Childe-Freeman.

The euro held steady against the dollar amid mounting expectations the European Central Bank is poised to cut interest rates next week, on December 5.

Bundesbank president and ECB council member Ernst Welteke said the inflation situation had improved since the ECB’s last monetary policy meeting.

If we see no negative aspects for price development over the medium term, we could possibly make an interest rate move to psychologically create an improved climate, Welteke told the Handelsblatt newspaper.

Elsewhere, the Swedish krona rose to 9.0463 to the euro from 9.0845 late Thursday after Sweden said it would hold a referendum on whether to adopt the single European currency on September 14.

It wasn’t a big surprise. Even the date (of the referendum) had been widely talked about, said ABN Amro currency strategist Rob Hayward.

Six maybe 12 months ago it would have been more interesting (for the pound) but now I think people are increasingly becoming of the view that it’s becoming impossible for the (British) government to hold a referendum, Hayward said.

The euro was changing hands at 0.9936 dollars from 0.9947 late on Thursday in New York, 121.73 yen (121.50), 0.6411 pounds (0.6416) and 1.4761 Swiss francs (1.4750).

The dollar was being quoted at 122.51 yen (122.28) and 1.4857 Swiss francs (1.4843).

The pound was at 1.5498 dollars (1.5490), 189.88 yen (189.36) and 2.3026 Swiss francs (2.2995).

On the London Bullion Market, the price of an ounce of gold rose to $319.05 from 318.25 late on Thursday. —AFP