By James Ramage

The yen fell against the dollar and euro Friday after investors shifted away from haven assets, such as the Japanese currency, gold and U.S. Treasurys.

The dollar climbed 0.2% to ¥101.38, while the euro rose 0.2%, to ¥137.13, its strongest level against the Japanese currency since Feb. 6.

The yen had gained Thursday on news that a Malaysia Airlines passenger plane crashed in Ukraine. The Japanese currency reversed those gains Friday, with investors moving into assets perceived as risky, including emerging-market currencies and stocks, both of which saw gains on the day. The perception among traders and analysts has grown that hostilities in eastern Ukraine are not likely to drag down global growth.

"Until the market gets a better sense of the trajectory of those events, you can expect some residual caution," said Ian Gordon, FX strategist at Bank of America Merrill Lynch. "But the market has stabilized since yesterday, as it does not expect widespread spillover into the G-10 space."

In late trade, the benchmark 10-year Treasury note fell 10/32, yielding 2.487%. Bond yields rise as their prices decline. For investors, higher U.S. bond yields make the dollar more attractive, as they boost returns on dollar-denominated assets. In addition, the price of the dollar against the yen has been known to move similarly to the yield on the 10-year note.

The Japanese currency strengthened shortly after the U.S. widened sanctions against Russia for its role in increasing tensions along its border with Ukraine. On Thursday, news emerged that a Malaysia Airlines passenger jet crashed in eastern Ukraine, pushing the yen to highs on the day against the dollar and euro. By late afternoon, Israel began its ground invasion of the Gaza Strip.

"Generally, we're seeing reversal of price action we saw yesterday," Mr. Gordon said.

-- Write to James Ramage at james.ramage@wsj.com

(END) Dow Jones Newswires

July 18, 2014 15:52 ET (19:52 GMT)

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