NEW YORK (Bloomberg) — The yen rose the most against the euro since January and gained against all of its major counterparts as evidence of global weakness discouraged investors from buying higher-yielding assets.

The euro fell this week versus the dollar for the first time in a month as the economy of the nations using the currency had its biggest decline in at least 13 years. The dollar dropped the most against the yen since October as US retail sales unexpectedly decreased and initial jobless claims rose more than economists forecast.

"We've taken a step back in risk appetite this week," said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. "The mood is more sober, and the yen is a beneficiary of that."

The yen gained 4.3 percent to 128.43 per euro, from 134.23 on May 8, and touched 127.96 yesterday, the strongest level since April 29. The euro depreciated 1 percent to $1.3495 from $1.3634. The yen climbed 3.3 percent this week to 95.21 per dollar and reached 94.74, the strongest since March 20.

Japan's currency gained this week versus all of the 16 most actively traded counterparts tracked by Bloomberg on speculation weak economic reports will reduce demand for the carry trade, in which investors get funds in a country with low borrowing costs and buy assets where they expect returns to be higher.

The yen rallied 9.7 percent to 10.85 against the South African rand and increased 7.1 percent to 14.51 versus Norway's krone. The Bank of Japan's target lending rate of 0.1 percent compares with 8.5 percent for South Africa and 1.5 percent for Norway.

Stocks fell last week, with the Standard & Poor's 500 Index losing five percent, the biggest loss since March. The MSCI World Index of shares fell 3.4 percent after rising 38 percent from March 9 through May 8.

Gross domestic product of the nations that use the euro fell 2.5 percent in the first quarter, the European Union¿s statistics office said. It¿s the biggest drop since the beginning of euro-area GDP data in 1995 and exceeded the two percent reduction forecast in a Bloomberg survey of economists.

"There has been a large setback to the recovery camp because of the euro-zone GDP numbers," said Samarjit Shankar, a director of global strategy in Boston at Bank of New York Mellon Corp., which administers more than $20 trillion in assets. "You're seeing another ebb and flow of risk appetite."

The US currency dropped versus the yen as the Labor Department reported that initial jobless claims increased to 637,000 in the seven days ended May 9 from 605,000 a week earlier. The median forecast of 38 economists surveyed by Bloomberg was for an advance to 610,000.

Retail sales in the US decreased 0.4 percent last month after dropping a revised 1.3 percent in March, the Commerce Department reported in Washington. The median forecast of 68 economists surveyed by Bloomberg was for no change.

The yen may extend its gain versus the dollar to 91.50, a level last reached in February, after the greenback traded in a "head-and-shoulders" formation that signals a peak, Marc Chandler, head of currency strategy at Brown Brothers Harriman & Co., said in a research note on May 12.

Such a pattern is a peak, followed by a higher peak, then another smaller peak. It forms during a series of increases over time, and once completed the currency typically moves lower.