Dec. 7 (Bloomberg) -- The yen headed for a weekly fall against 14 of the 16 most-active currencies after a rally in global stocks prompted investors to buy higher-yielding assets with funds borrowed in Japan.

The yen fell against the dollar and equity markets in Asia and Europe rose today after an announcement by U.S. President George W. Bush to freeze interest rates on some subprime mortgages, easing concern that defaults will hurt the worlds' largest economy.

``The yen is on a weakening trend,'' said Greg Gibbs, a currency strategist in Sydney at ABN Amro Holding NV, the largest Dutch bank. ``The announcement by the Bush administration helped equities rebound out of a hole.''

Japan's currency weakened 0.2 percent to 111.50 against the dollar as of 7:55 a.m. in New York, from 111.32 late yesterday and 111.24 a week ago. It also fell 0.3 percent to 163.24 per euro, from 162.93 yesterday and 162.82 on Nov. 30.

The yen declined 2.1 percent against the New Zealand dollar this week to 86.77. Brazil's real and South Africa's rand were among the top-three best performers versus the yen.

In carry trades investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the difference between the two. The Bank of Japan's benchmark rate is 0.5 percent, compared with 8.25 percent in New Zealand, 11.25 percent in Brazil and 11 percent in South Africa.

This week's 1.8 percent advance in Japan's Nikkei 225 Stock Average also encouraged investors to resume carry trades. The Nikkei had a correlation of minus 0.93 with the yen in the past year, according to data compiled by Bloomberg. A value of minus 1 means the two tend to move in opposite directions.

Payrolls Report

The dollar rose the most against the Australian dollar, Swedish krona and Japanese yen today before a payrolls report that is expected to beat economists' forecasts, suggesting the economy is weathering the biggest housing slump in 16 years.

The dollar rose 0.4 percent against the Australian currency to $1.1420 from $1.1378 yesterday, and 0.3 percent versus the Swedish Krona to 6.4271.

The Labor Department will say non-farm employers created 80,000 jobs in November, compared with 166,000 the month before, according to a Bloomberg News survey of economists. ADP Employer Services said on Dec. 5 companies in the U.S. added 189,000 jobs in November, three times faster than economists expected.

``With so much gloom discounted, I think it's tough to be a dollar bear,'' said Jim O'Neill, chief economist in London at Goldman Sachs Group Inc., the most profitable securities company. ``Depending on what happens today, maybe the dollar is going to start a bit of a turnaround.''

Dollar Index

The U.S. Dollar Index traded on ICE Futures in New York rose 0.3 percent this week to 76.33. It fell to 74.48 on Nov. 23, the weakest since it began trading in 1973.

Traders trimmed bets on a half-percentage point rate cut by the Federal Reserve on Dec. 11. Fed funds futures traded on the Chicago Board of Trade suggest investors see a 36 percent chance policy makers will lower the cost of borrowing to 4 percent from 4.5 percent, down from 38 percent a week ago. They see a reduction of at least a quarter point as a certainty.

The euro was little changed against the dollar today and on the week. It traded at $1.4641, after rising 0.2 percent yesterday on a warning by European Central Bank President Jean- Claude Trichet that the central bank ``stands ready to counter upside risks to price stability.''

To contact the reporters on this story: Gavin Finch in London at gfinch@bloomberg.net

Last Updated: December 7, 2007 07:57 EST