By Hiroyuki Kachi

TOKYO--The yen was weaker against its rival currencies in another day of choppy Asia trade Wednesday, with risk aversion receding along with a mild recovery in stocks.

Around 0450 GMT, the greenback was maintaining much of its earlier gains and was at Y120.22 from Y119.38 late Tuesday in New York. The Japanese currency was also lower against the euro, which rose to Y135.59 from Y135.18 late Tuesday.

Amid deepening fears about a slowdown in China's economy that have roiled global financial markets in recent days, the greenback remained weak earlier in the session. But the U.S. currency gained traction to stay above Y120 later, following a stock market recovery in Tokyo and Shanghai.

The Nikkei Stock Average was up 1.1% at midday at 182360.22, on the track to close higher after a two-day losing streak. But the benchmark has lost about 4% since the beginning of this week. After opening 4.4% lower, the Shanghai Composite Index was recently trading 0.3% higher.

Investors sell the Japanese currency, which they consider as a safe haven, when geopolitical or financial instability recedes.

However, Tokyo-based dealers and analysts said it is premature to gauge whether bruised market sentiment is turning for the better.

"Until the Chinese government's policy response regains credibility in the market, (the dollar) will likely remain top heavy" against the yen, said Shusuke Yamada, chief FX strategist at Merrill Lynch Japan.

"Worsening risk sentiment is a problem with no easy solution," thus leaving the dollar vulnerable to downside risk against the yen, Mr. Yamada said.

China's central bank said Tuesday it will impose fresh controls to prevent outflows of the yuan by adding conditions to futures contracts.

"The new rule shows Beijing's inability to control the capital outflow," said Nikko SMBC chief strategist Chotaro Morita in a morning note. "It seems the move helped worsen the market sentiment."

Investors are now paying attention to whether a coordinated response on China will be forthcoming when financial representatives from the Group of 20 advanced and developing economies meet in Ankara, Turkey, on Friday and Saturday.

Japanese finance minister Taro Aso said Tuesday he will call for discussions on China's structural problems at the meeting.

In other currency trading, the dollar was higher against the euro, which was at $1.1284 midday from $1.1315.

The commodities- and resources-linked Australian dollar erased earlier losses that followed the release of the slower-than-expected economic growth data Wednesday. The Aussie advanced to $0.7028 and Y84.50 from $0.7019 and Y83.79.

Australia's gross domestic product climbed by 0.2% from the first quarter and by 2% from a year earlier, government figures showed, the weakest quarterly performance since March 2011, when heavy floods along the east coast caused the economy to shrink by 0.4%.

The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.21% at 88.38.

 
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT 
 
                           Latest       Previous   %Chg    Daily    Daily   %Chg 
Dollar Rates                               Close            High      Low  12/31 
 
USD/JPY Japan           120.22-23      119.37-38  +0.72   120.45   119.22  +0.42 
EUR/USD Euro            1.1280-83      1.1313-16  -0.29   1.1324   1.1262  -6.75 
GBP/USD U.K.            1.5308-10      1.5304-06  +0.03   1.5320   1.5291  -1.73 
USD/CHF Switzerland     0.9616-20      0.9586-90  +0.31   0.9634   0.9581  -3.27 
USD/CAD Canada          1.3224-29      1.3258-63  -0.26   1.3264   1.3224 +13.81 
AUD/USD Australia       0.7027-31      0.7018-22  +0.13   0.7035   0.6983 -13.98 
NZD/USD New Zealand     0.6358-64      0.6329-35  +0.46   0.6368   0.6318 -18.40 
 
Euro Rate 
 
EUR/JPY Japan           135.59-63      135.06-10  +0.39   135.79   134.95  -6.44 
Source: Tullett Prebon

Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com

(END) Dow Jones Newswires

September 02, 2015 01:47 ET (05:47 GMT)

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