(Updates price, adds quotes, changes byline)
By Jamie McGeever
LONDON, Nov 13 (Reuters) - The yen fell from Monday's 18-month peak against the dollar on Tuesday after comments from Japan's prime minister on the carry trade prompted dealers to call an abrupt halt to the unwinding of of these positions that had pushed the yen higher in recent days.
The Financial Times quoted Prime Minister Yasuo Fukuda as saying the yen was appreciating "too fast" and speculators needed to "be careful" to avoid the possibility of intervention.
This pushed the yen lower across the board, which in turn helped keep the dollar in check against most major currencies. The relatively high-yielding Australian and New Zealand dollars gained more than 2 percent against the yen and more than 1 percent against the greenback.
Above-forecast Japanese growth data and the Bank of Japan leaving interest rates on hold at 0.5 percent had little immediate impact on the currency.
Surprisingly high UK inflation helped support sterling but weak German investor sentiment data failed to have a notable influence on the euro. Both sets of data, however, appeared to bolster the view UK and euro zone rates will be kept on hold for some months yet.
"Fukuda's comments underlined the near-term risks. For now, these comments could stem the appetite for yen buying," said Derek Halpenny, senior currency economist at BTM-UFJ in London.
"People have come back into the yen cross positions and that has helped the non-dollar currencies like the euro, sterling and the kiwi. This is more a yen move than a dollar move."
At 1150 GMT the dollar was up half a percent at 110.01 yen <JPY=> after falling as low as 109.10 yen on Monday.
The euro was up 0.9 percent at 106.47 yen <EURJPY=>, which helped lift the single currency by 0.3 percent against the dollar to $1.4585 <EUR=> to within a couple of cents of last week's record high of $1.4752.
High-yielding currencies including the Australian and New Zealand dollars rose more than 1.5 percent against the U.S. currency <AUD=> <NZD=> and more than 2 percent against the yen <AUDJPY=R> <NZDJPY=R>.
GERMAN CONFIDENCE TUMBLES
The low-yielding yen had surged in recent days as renewed fears that credit-related problems could spread to the wider U.S. economy sapped risk appetite among investors, prompting them to buy back the yen they had sold to fund purchases of higher-return currencies.
But both Halpenny at BTM and Daragh Maher, senior currency strategist at Calyon, said the uncertainty still swirling in financial markets could still lead to further yen gains.
"The market as a whole has a lot of nervousness. Ultimately it hinges on the news on the banking side and the stock markets and that's the starting point for where risk appetite is," Maher said.
Earlier, data showed Japan's economy grew a bigger-than-expected 0.6 percent in the July-September quarter and the BOJ kept interest rates unchanged at 0.50 percent as widely expected, reflecting caution among central bankers over market uncertainty and credit and U.S. housing market turmoil.
Figures at 2000 GMT are expected to show that pending U.S. home sales fell 2.8 percent in September, the pace of decline slowing from the 6.5 percent fall in August.
U.S. interest rate futures still fully expect the Federal Reserve to cut rates a quarter point to 4.25 percent next month.
In Europe, meanwhile, the expectations component of the ZEW's November survey of German investor sentiment fell to its lowest since February 1993. For more, see [ID:nL13461561].
The European Central Bank left interest rates on hold at 4 percent last week in the face of slowing growth and rising inflation.
UK consumer inflation in October rose 2.1 percent on the year, higher than expected and back above the Bank of England's 2 percent target. See [ID:nL13284023]. The pound rose to $2.07 <GBP=>.
(editing by Ian Jones)