Yen suffers its biggest decline in three months

The yen fell by the most in three months against the euro and dropped versus the dollar as the US government's takeover of Fannie Mae and Freddie Mac prompted investors to buy higher-yielding assets.

The yen slumped by the most in six months against the Australian and New Zealand dollars, two favorites of so-called carry trades, as stocks rose on speculation support for the two mortgage companies will stem a crisis that has caused more than $500 billion of losses and writedowns. The dollar advanced against the euro for an eighth day.

"All equity markets are firmly higher on the Fannie and Freddie development and risk appetite is receiving a boost," said Michael Klawitter, a currency strategist with Dresdner Kleinwort in Frankfurt. "All the yen crosses are being pushed higher on the back of this."