June 27 (Bloomberg) -- The yen rose the most in 10 weeks against the euro and the dollar as investors pared holdings of emerging-market bonds and stocks funded by loans in the Japanese currency.

The yen gained against all 16 of the most-actively traded currencies, extending its rally after Finance Minister Koji Omi yesterday stressed the risk of one-way foreign-exchange bets. Global equity markets and Asian currencies declined today, as investors shunned riskier assets, prompting an unwinding of the so-called carry trade.

``The combination of a very clear change of stance towards the currency markets within Japan's Ministry of Finance along with continued losses for global equity markets is taking its toll,'' said Simon Derrick, chief currency strategist at Bank of New York in London. ``Yen-funded carry trades are experiencing a sharp unwinding.''

Against the euro, the yen rose to 164.64 as of 7:12 a.m. in New York, from 165.83 late yesterday. It earlier touched 164.30, the biggest gain since April 19. Japan's currency also rose to 122.45 versus the dollar, from 123.26. It earlier reached 122.37, the biggest advance since April 17.

The yen climbed against the New Zealand dollar after central bank Deputy Governor Grant Spencer in an article e-mailed to Bloomberg echoed Omi's comments and said traders should expect further intervention to sell its currency.

Japan's currency added the most in two weeks against New Zealand's dollar to 93.19 yen from 94.41 yesterday. It advanced for a third day against the Australian dollar, climbing 1.4 percent to 102.85, the strongest since mid-June.

Asian Currencies

Asian currencies including Indonesia's rupiah, the Philippine peso and the Malaysian ringgit slumped today on speculation investors are cutting their holdings of emerging- market assets.

Investor confidence to put on so-called carry trades, in which they borrow at Japan's lower interest rates to buy higher- yielding assets elsewhere, may ebb as the Morgan Stanley Capital International Asia-Pacific index of leading regional shares fell by the most in almost three weeks. The Standard & Poor's 500 Index is set for the biggest monthly loss in more than a year, while European stocks dropped for a fifth day today.

Gains in the yen may be limited by speculation fund managers will convert it into foreign currencies as they prepare to launch investment trusts composed of overseas assets.

``We're going to see carry trades for a long time,'' Gabriel de Kock, chief currency economist in New York at Citigroup Global Markets, said at a conference on foreign exchange in Singapore. ``The yen will be a dog.''

U.S. Durable Goods

The dollar was little changed against the euro ahead of a report that's likely to show U.S. durable goods orders fell 1 percent last month, the most since January, after rising a revised 0.8 percent in April, according to the median forecast of 73 economists surveyed by Bloomberg.

Federal Reserve policy makers also start their two-day rate- setting meeting today, with economists surveyed by Bloomberg forecasting the Fed to leave its benchmark lending rate at 5.25 percent.

``There's a real risk that we continue to see U.S. data disappoint,'' said Jonathan Cavanagh, a currency strategist at Westpac Banking Corp. in Sydney. ``The dollar has further to go on the downside.''

The dollar earlier rose against the euro as investors sought the safest assets such as U.S. Treasuries to avoid risk.

``With equity market volatility and risk aversion going on, people will want to protect what they're already heavily invested in,'' said David Watt, a senior currency strategist at RBC Capital Markets Ltd. in London. ``People are jumping into the Treasury market and that's giving the dollar a bit of a boost.''

U.S. Treasuries rose for a fourth day, the longest run of gains since February, with the yield on the benchmark 10-year note sliding as much as 3 basis points to 5.05 percent today. The dollar last traded at $1.3443 per euro, from $1.3454 yesterday.

Euro Rally Stall

The euro's rally from a June 13 low may stall, according to technical charts traders use to predict currency movements, said Yuji Saito, head of the foreign-exchange sales department at Societe Generale SA in Tokyo.

The failure of the euro to sustain a break above so-called resistance at $1.3470 for the three previous days suggests further gains may be limited, Saito said. Resistance is a level where sell orders may be clustered.

``The euro looks bearish on the charts,'' he said. ``The euro may pull back to $1.3400 today,'' from $1.3425.

The $1.3470 level represents a 50 percent retracement of the euro's fall to the June 13 low from the April 27 high of $1.3681, based on a series of numbers known as the Fibonacci sequence.

To contact the reporter on this story: Aaron Pan in London at apan8@bloomberg.net; David McIntyre in Sydney at dmcintyre2@bloomberg.net

Last Updated: June 27, 2007 07:27 EDT