The JPY has strengthened further in early European trade with risk aversion again to the fore, USD/JPY presently down at 94.70 while EUR/JPY is at 119.80. European stocks are lower this morning, the FTSE 100 and DAX 30 both down around 1%. The market doesn’t seem overly perturbed by overnight comments from Bank of Japan Governor Shirakawa, the official warning that volatile moves in the yen could affect the Japanese economy and that the bank is keeping an eye on the situation. Elsewhere, in an interview with the F.T. Japanese Finance Minister Kaoru Yosano warns that Japan’s economy is unlikely to respond to a planned fiscal stimulus package and will have to endure higher unemployment and possibly a return to deflation and shrinking output.