The U.S. currency climbed as high as 116.24 yen before the rally triggered automatic levels to purchase the yen and sell the dollar, said Niels Christensen, a currency strategist at Societe Generale SA in Paris. The dollar hasn't gained for seven straight weeks versus the yen in nine years.

Against the yen, the dollar fell to 115.33 by 11:33 a.m. in London from 115.86 late yesterday in New York, according to electronic foreign-exchange dealing system EBS. Against the euro, the dollar dropped to $1.2135, from $1.2070.

Some traders sold the dollar and bought the euro on signs the European Central Bank is moving closer to its first interest rate increase since 2000. Bundesbank President Axel Weber said in a speech in Munich late yesterday that the ECB may need to raise rates to preserve its credibility and damp expectations inflation will accelerate. He spoke after the close of trading in European markets.

ECB policy makers have kept their benchmark rate at 2 percent since 2003. The Federal Reserve raised its target rate for overnight loans between banks 11 times since June last year to 3.75 percent. The Bank of Japan has kept borrowing costs near zero for more than four years.

Gains may be limited after Japan's top currency official Hiroshi Watanabe said today in Tokyo that the government doesn't view the yen as weak and currencies aren't deviating from economic fundamentals.

``We don't have concern that the yen is particularly weak,'' Watanabe told reporters. U.S. economic growth is stronger than Japan's, which justifies recent yen moves, he said.

The yen's drop was a buying opportunity for investors seeking to bet Japan's economy will continue to pick up, said Lee Wai Tuck, a currency strategist at Forecast Singapore Ltd. Japanese industrial production probably rose for a second month, according to economists polled by Bloomberg before a government report tomorrow.

Industrial production probably increased a seasonally adjusted 2.0 percent in September from the previous month, the fastest pace of growth since January, a report is expected to show tomorrow, according to the median forecast of 35 economists surveyed by Bloomberg.

Japan's economy, the world's second largest, expanded at an average annual pace of 4.6 percent in the first six months of this year, the most in 15 years.

The dollar also declined on concern about General Motors Corp., the world's biggest automaker, which said U.S. regulators are probing its pension accounting and transactions with bankrupt parts maker Delphi Corp.

GM is cooperating with the investigation after the Securities and Exchange Commission issued subpoenas, company spokesman Jerry Dubrowski said yesterday in an e-mail. Royal Bank of Scotland Group and BNP Paribas SA said in European morning notes that speculation GM will file for bankruptcy also weighed on the dollar in Asian trading today.

Jay Cooney, GM's director of communications for the Asia- Pacific region, denied speculation the company will file for bankruptcy. The speculation is ``absolutely untrue,'' he said in a telephone interview.

This is cache, read story here