Nov. 10 (Bloomberg) -- The dollar traded near a two-week low against the euro as reports forecast to show improvement in Chinese industrial production and exports lifted demand for higher yielding assets.

The yen slumped versus 14 of its 16 major counterparts as Asian shares continued a global rally, paring demand for Japan’s currency as a refuge. The pound gained after a report today showed U.K. home values rose more than forecast in October.

“As solid data indicate, China’s economy is strong and keeps expanding,” said Minoru Shioiri, Tokyo-based chief manager of foreign exchange trading at Mitsubishi UFJ Securities Co. “The market remains negative on the dollar and the yen.”

The dollar traded at $1.4989 per euro as of 9:55 a.m. in Tokyo from $1.4999 in New York yesterday, when it touched $1.5020, the lowest since Oct. 26. The yen was at 134.89 per euro from 134.91. The dollar fetched 89.99 yen from 89.93 yen.

The Nikkei 225 Stock Average rose 1.5 percent, and the MSCI Asia Pacific Index of regional shares gained 0.7 percent. The Dow Jones Industrial Average gained 2 percent to yesterday in New York to the highest level since October 2008.

The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, dropped 1 percent to 75.044 yesterday in New York. The gauge touched 74.930, the lowest level since August 2008. The index has lost 7.7 percent in 2009.

China’s Data

Economists surveyed by Bloomberg News forecast China’s factory output probably rose 15.5 percent in October from a year earlier after gaining 13.9 percent in September. The statistics bureau is set to release the data tomorrow in Beijing.

“Growing optimism about the state of the Chinese economy will support demand for currencies of countries that produce commodity products, such as Australia,” said Toshiya Yamauchi, manager of the foreign-exchange margin-trading department at Ueda Harlow Ltd. in Tokyo.

China’s customs bureau will report tomorrow that exports fell 13 percent last month from a year earlier, according to another Bloomberg survey. That would be the slowest decline since December 2008.

President Barack Obama said he will bring up currency issues when he meets with China’s President Hu Jintao and Premier Wen Jiabao in Beijing next week, Reuters reported.

“Currency, along with a host of other issues, will come up, and I’m confident that both the United States and China can arrive at a broad set of policies that encourages trade that benefits both countries,” Obama said in an interview with Reuters yesterday.

Obama’s comments come in advance of his Nov. 12 departure for his first trip as president to Asia. He plans to make stops in Tokyo, Singapore, China and South Korea.

The pound gained as the Royal Institution of Chartered Surveyors today reported the number of respondents surveyed saying prices rose in October exceeded those reporting declines by 34 percentage points. Economists in a Bloomberg News survey estimated the figure would be 28 percentage points. The pound rose to $1.6782 from $1.6759.

-- With assistance from Candice Zachariahs in Singapore and Julianna Goldman in Washington. Editors: Rocky Swift, Garfield Reynolds

To contact the reporters on this story: Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net; Yasuhiko Seki in Tokyo at Yseki5@bloomberg.net

Last Updated: November 9, 2009 20:13 EST