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The market will look to recover from its New Year’s hangover in the coming week. Stocks have slumped since the market reopened for business after an extended break. In 2007’s three days of trading, the Dow fell 65 points, or 0.5%, and the S&P 500 was down 8 points, or 0.6%. The Nasdaq, meanwhile, rose about 19 points, or 0.8%. Although it’s easy to slough off a holiday-shortened week of trading, market strategists are wary of starting the year on the wrong foot. According...

European finance ministers express renewed concern about the weak yen

February 3, 2007 on 2:41 am | In |

BRUSSELS: European finance ministers stepped up their criticism Monday of the yen’s drop against the euro, highlighting a problem that the Group of 7 industrial powers was to broach next week in Germany.

The yen’s 10 percent fall against the euro over the past year is making Europe “increasingly worried,” Jean- Claude Juncker, the prime minister and finance minister of Luxembourg, told reporters in Brussels, where he was chairman of a meeting of ministers from the 13-country euro area.

“We don’t like this volatility of the exchange rate and we have to discuss it,” Juncker said.

Germany’s finance minister, Peer Steinbrьck, said he was pressing fellow G-7 officials to cite the yen’s decline which is near record lows against the euro as a problem when they meet next week.

European governments worry that the declining yen is hurting their economy by forcing up the costs of exports to Japan and widening the euro region’s trade deficit. Financial markets are more focused on the gap between Japanese interest rates the lowest in the G-7 and higher returns on euro-denominated assets, showing the limits of G-7 power to sway the currency one way or another with rhetoric alone.

While the G-7 finance ministers and central bankers made no mention of the yen in the statement released after they last met in September, European officials expressed concern on the sidelines of those talks and won an acknowledgment from the Japanese government that its currency’s slide was too rapid.

The rhetoric was to no avail, with the yen falling to a record low against the euro on Oct. 27. The yen traded at 157.07 to the euro late Monday, up from that low of 150.74.

The G-7 policy makers are scheduled to gather Feb. 9-10 in Essen, Germany for their first talks of the year. The G-7 members are the United States, Japan, Germany, Britain, France, Italy and Canada.

Since February 2004, the G-7 has stuck to the joint view that “exchange rates should reflect economic fundamentals” and that “excess volatility and disorderly movements in exchange rates are undesirable for economic growth.” The only currency it has singled out for criticism is the Chinese yuan, which it wants to strengthen.

The U.S. Treasury under secretary for international affairs, Timothy Adams, last week signaled Washington would not back a change in the G-7 statement. During an interview at Davos, Switzerland, Adams said Japan’s economy still had “weak spots” and advocated that markets set exchange rates. $@