//quote.bloomberg.com//Tokyo, Aug. 21 (Bloomberg) -- The dollar declined against the yen, snapping a three-day gain, after U.S. equities dropped yesterday and on a newspaper report Saudi Arabians withdrew as much as $200 billion in U.S. assets amid rising U.S.-Arab tension. The dollar fell to 118.10 against the yen at 2:08 p.m., Tokyo time, compared with 118.80 in the late New York trading yesterday. Against the euro, it fell to 98.35 from 97.88. The dollar is down 10 percent against both currencies this year.
``The decline in the stock market reminded us that nothing has changed with our concern for the U.S. economy,'' said Yasuharu Tsuru, a foreign exchange manager at Mitsubishi Trust & Banking Corp. Saudi investments in U.S. stocks, private equity, bonds and real estate are between $400 billion and $600 billion, the Financial Times newspaper reported yesterday. Between $100 billion and $200 billion of that was sold after some U.S. commentators called for a freeze on Saudi assets, the report said, citing Youssef Ibrahim, a senior fellow at the Council on Foreign Relations. The money is probably moving into European assets, the paper said.
``The euro is firming against the dollar due to the story going around the market today Saudi Arabia is yanking money out of the U.S.,'' said Ronald Leven, foreign exchange strategist at Lehman Brothers Japan Inc. ``Otherwise, European news is so bad.'' The yen was also helped against the dollar as Japanese bonds rose, pushing 10-year yields to their lowest level in more than a year, increasing demand for currency. ``A surge in the bond market is bringing capital inflow,'' said Hidenobu Yanagisawa, deputy general manager of the international treasury division at Fuji Bank Ltd.
U.S. Stocks The Dow Jones Industrial Average and Nasdaq Composite Index fell 1.3 percent yesterday. The Dow is down 11 percent and the Nasdaq 29 percent this year. The slide in stock prices and doubts about a pickup in business investment pose threats to the world's largest economy, analysts said, which grew at a 1.1 percent annual rate from April through June after expanding at a 5 percent pace in the first three months of the year.