The euro rose from the lowest level in nearly three weeks against the yen as signs the global economy is recovering trimmed demand for the relative safety of the US and Japanese currencies.

The Australian dollar climbed against the yen and the greenback after Treasurer Wayne Swan said economic growth will be faster than expected and a government report showed house price increases accelerated. Japan’s currency earlier rose to the most in almost three weeks against the dollar and the euro after New York-based CIT Group Inc. filed for bankruptcy.

“Global data still suggest that the economy is on the mend,” said Minoru Shioiri, chief manager of foreign exchange trading at Mitsubishi UFJ Securities Co. “The underlying need to invest in higher-yielding currencies through carry trades remains intact.”

The euro earlier fell to ¥131.01, the least since October 9, before trading at ¥132.69 as of 12:17 p.m. in Tokyo from 132.61 in New York on October 30. The yen was at 89.96 per dollar from 90.09 in New York, after touching 89.20, the strongest since October 14. Japan’s currency slid to 81.14 per Australian dollar from 81.05 on October 30, after rising to 79.47, the most since October 8.

Australia’s currency fetched 90.19 US cents from 89.97 cents in New York on October 30. New Zealand’s dollar was at 71.81 US cents, unchanged from last week.

The Australian dollar reversed declines against the greenback after futures signaled US stocks may recover from their biggest weekly slump since May, supporting demand for higher-yielding assets. Futures for the Standard & Poor’s 500 index advanced 0.5 percent.

Australia’s government said today the nation’s economy will expand 1.5 percent, compared with a May prediction of a 0.5-percent contraction, in the 12 months ending June 30, 2010.

An index measuring the weighted average of prices for established houses in Australia’s eight capital cities climbed 4.2 percent in the third quarter from the second, the Australian Bureau of Statistics said in Sydney today.

Benchmark interest rates are 3.25 percent in Australia and 2.5 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero in the US, attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.

The yen climbed earlier after CIT Group, the 101-year-old commercial lender, listed $71 billion in assets and $65 billion in debt in its bankruptcy protection, spurring investors to sell higher-yielding assets.

Japanese Finance Minister Hirohisa Fujii said events in the US are causing the yen to rise against the dollar and he is watching currency movements closely. Low interest rates in the US and the bankruptcy filing of CIT Group are among the reasons Japan’s currency is rising against the dollar, Fujii told reporters in Tokyo.

US taxpayers probably won’t recoup much, if any, of the $2.3 billion in government funds that went to CIT Group, Treasury Department spokesman Andrew Williams said in an e- mailed statement after the 101-year-old commercial lender filed for bankruptcy protection.

“The US financial system is far from bei ng in perfect health,” said Mitsuru Saito, chief economist in Tokyo at Tokai Tokyo Securities Co. in Tokyo.