The dollar fell against the yen in Asia trade Thursday, as fears over the global economy pushed down stock markets and prompted an adjustment of the greenback following the rapid gains of recent days.

As of 0450 GMT, the dollar was at Y108.74 from Y108.89 late Wednesday in New York, after falling as low as Y108.55. The greenback remained well below its six-year high Y110.09 set Wednesday afternoon.

Renewed concerns about global economic growth emerged following anemic readings for the manufacturing sector the U.S. and Germany fueled heavy selling on Wall Street overnight.

Weaker risk sentiment carried through into Asia trade hours, with steep falls in the Nikkei Stock Average reinforcing buying of the safe-haven yen against the dollar. The benchmark index was 2.1% lower in the afternoon session, falling below the 16000 mark for the first time in two weeks.

Still, the dollar's downside against the yen showed some support from Japanese importers and others looking to pick up the greenback on dips.

"The dollar's quick downturn after touching Y110 in such a short time means upward momentum is certainly dwindling," said Shusuke Yamada, chief Japan FX strategist at Merrill Lynch Japan Securities.

"I don't think the dollar will proceed beyond the Y110 mark," Mr. Yamada said. Although the greenback may temporarily touch the threshold should U.S. jobs data out Friday prove upbeat, such an uptick would be short-lived, he said.

Mr. Yamada said the U.S. currency would likely be hovering around Y108 around the end of this year, below its current level since the yen is already relatively weak in terms of its effective exchange rate using a weighted average of currency rates among Japan's trading partners.

Secondly, the recent rally that brought the dollar 8% higher against the yen suggests diverging monetary policy between the U.S. and Japan has been fully factored in, he said.

Finally, there may be jawboning about the dollar-yen move from authorities in the U.S. and Japan that could generate some resistance to another sharp upward advance of the greenback.

Shinji Kureda, head of FX trading group at Sumitomo Mitsui Banking Corp., said the dollar may have entered an adjustment phase, after its sprint across the Y110 line Wednesday, as "a feeling of accomplishment" spreads within the currency market.

With U.S. economic data so far this week lacking vigor, investors are feeling less bullish. "The downside risk [for the dollar] is increasing," Mr. Kureda said.

With investors awaiting what will come out of the European Central Bank policy meeting later Thursday after disappointing eurozone economic indicators, the euro was at $1.2659 from $1.2624. The common currency was at Y137.63, compared with Y137.45.

The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was down 0.30% at 77.58. Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT

Latest

Previous

%Chg

Daily

Daily

%Chg

2150 GMT

High

Low

12/31 Dollar Rates USD/JPY Japan

108.72-74

108.87-91 -0.15

109.11

108.56 +3.25 EUR/USD Euro

1.2658-60

1.2622-25 +0.28

1.2674

1.2616 -7.90 GBP/USD U.K.

1.6234-38

1.6184-89 +0.31

1.6249

1.6180 -1.94 USD/CHF Switzerland

0.9534-38

0.9557-61 -0.24

0.9567

0.9528 +6.79 USD/CAD Canada

1.1084-88

1.1161-66 -0.69

1.1166

1.1072 +4.37 AUD/USD Australia

0.8807-10

0.8737-41 +0.80

0.8815

0.8726 -1.19 NZD/USD New Zealand

0.7878-82

0.7785-90 +1.19

0.7927

0.7768 -4.15

Euro Rate EUR/JPY Japan

137.63-66

137.44-54 +0.11

138.11

137.32 -4.90 Source: ICAP PLC

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

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