The yen retreated from recent 13-year highs against the dollar on Tuesday as stock markets rebounded and risk aversion ebbed, with the possibility of official intervention also weighing on the currency. European shares rose 3.8 percent as investors eased up on unloading riskier positions. Those gains followed a 6.4 percent jump in Japan's Nikkei share average from a 26-year low as investor bets on falling share prices were restricted. In tandem with equity gains the yen dropped across the board, particularly against currencies such as the euro and the high-yielding Australian dollar which have taken a battering recently as investors' wariness of risk reached extreme levels. "The share gains have helped some of the removal of negative sentiment in forex markets," Investec economist David Page said. "This has led to some retracement in the yen against the dollar as well as a wider basket of currencies". The yen was further pressured by a Kyodo News Agency report that the Bank of Japan is set to cut Japan's economic growth estimate for the 2008/09 fiscal year to 0.3 percent from the current 1.2 percent. See. The euro was up 3.3 percent at 119.72 yen. The euro struck a 6-1/2 year low of 113.61 yen on Monday. The single currency also rose 0.7 percent against the dollar to $1.2549. Among the higher yielding currencies that have been pummelled recently, the pound rose 1.2 percent to $1.5721 and the Australian dollar jumped 3.8 percent to $0.6251. The Reserve Bank of Australia intervened in Asian trade for a third day to prop up the Australian currency, which has lost more than 35 percent against the U.S. dollar since peaking in July.