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The yen dropped to one-month lows against the dollar and the euro on Wednesday, as traders took data showing Japan had logged its first annual trade deficit since 1980 as a cue to snap up gains in the Japanese currency.

Selling in the yen picked up steam on the back of unwinding of yen long positions placed by speculators, with model and macro funds also spotted pressuring the Japanese unit.

The yen dropped to one-month lows against the dollar and the euro on Wednesday, as traders took data showing Japan had logged its first annual trade deficit since 1980 as a cue to snap up gains in the Japanese currency. Selling in the yen picked up steam on the back of unwinding of yen long positions placed by speculators, with model and macro funds also spotted pressuring the Japanese unit.

Tokyo exporters limited the downside for the yen, showing strong dollar-selling interest right below 78 yen, after the safe-haven yen on Tuesday suffered its biggest one-day fall since Japan intervened in the market in October.

Japan’s prime minister has pledged in his traditional new year’s press conference to bring “rebirth” to the area around the crippled Fukushima nuclear power plant.

Prime Minister Yoshihiko Noda said on Wednesday authorities would work to decontaminate the region from radioactive fallout, while ensuring compensation and health checks for those affected by the disaster.

Japan agreed to make $15 billion available to India in a currency swap arrangement as Europe’s deepening debt crisis threatens to curtail developing Asia’s access to dollar funding.

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Sentiment among Japan’s largest manufacturers deteriorated more than economists expected, underscoring the fragility of a post-quake recovery threatened by Europe’s debt crisis and a strengthening yen.

The Tankan large manufacturer index fell to minus 4 from 2, the Bank of Japan said today in Tokyo. The median estimate of 24 economists surveyed by Bloomberg News was for a reading of minus 2. A negative number indicates that pessimists outnumber optimists.

Tokyo stocks rose 1.71 per cent Wednesday ahead of a crucial European Union summit that will focus on tackling the eurozone debt crisis.

The benchmark Nikkei 225 index at the Tokyo Stock Exchange gained 147.01 points to close at 8,722.17.

The broader Topix index of all first-section issues rose 1.57 per cent, or 11.62 points, to 749.63.

The damaged nuclear power plant in Japan came a lot closer to a full meltdown than first thought. The company that runs the Fukushima Dai-ichi plant said Wednesday that the radioactive core inside Reactor 1 burned through a concrete containment barrier and nearly reached the soil below.

The nuclear plant was heavily damaged by an earthquake and tsunami back in March. And as CBS News correspondent Lucy Craft reports, many in Japan are worried about what all of this is doing to their food.

Japan on Wednesday restarted its first nuclear reactor since the Fukushima disaster in March, in a boost to its beleaguered atomic power industry faced with a deeply sceptical public.

Power began flowing from the Genkai nuclear power plant reactor in the south of Japan, Kyushu Electric Power said, less than a month after the facility automatically shut down following a safety alert.

The most salient feature of the Olympus scandal, which forced Chairman Tsuyoshi Kikukawa to resign yesterday, is that it never would have become a scandal at all if the company hadn’t hired a foreigner as CEO. Michael Woodford, a 30-year veteran of the company, was fired on Oct. 14 after he started asking questions about $1.3 billion in acquisition writedowns and advisory fees. According to a company spokesman, there were “major differences in management style and direction.”