Aug. 20 (Bloomberg) -- Australia's dollar rose to a one-month high on speculation the yield premium the nation's bonds and other assets offer will lure investors after reports signaled U.S. economic growth is stalling.

Australian two-year notes yield 2.79 percentage points more than U.S. debt of comparable maturity, compared with 2.68 points on Aug. 2. Reports yesterday in the U.S. showed indexes for manufacturing activity and leading economic indicators declined.

U.S. economic figures were ``once again a little on the weaker side so yield-related demand is certainly back on the table with the New Zealand dollar and the Australian dollar very well bid,'' said Michael Jansen, a currency strategist at National Australia Bank Ltd.

Australia's dollar rose to 72.36 U.S. cents at 10:42 a.m. in Sydney, after climbing to as much as 72.63 cents earlier, the highest since July 21. New Zealand's currency gained 0.7 percent to 67.12 U.S. cents.

The Australian currency has risen 3.1 percent against the U.S. dollar this month on declines in U.S. consumer prices and slowing jobs growth.

An index of manufacturing activity in the Philadelphia area fell to 28.5 in August from 36.1 in July. A Bloomberg survey of economists had forecast a reading of 30. The Conference Board said its leading economic indicator index slipped 0.3 percent in July. A Bloomberg survey forecast a 0.1 percent decline.

Australia's benchmark interest rate of 5.25 percent is 3.75 percentage points more than the U.S. target rate and the nation's 10-year government bond yield is 1.34 percentage points more than the U.S. note of comparable maturity.

Australia's 6.25 percent bond maturing April 2015 rose 0.352, or A$3.52 per A$1,000 face amount, to 105.494. The yield fell 4 basis points to 5.56 percent. A basis point is 0.01 percentage point.

Premiums offered on Australian assets such as bonds has helped bolster the local currency 4 percent higher in the past three months, making it the fourth-best performer of the 16 major currencies tracked by Bloomberg data.

The sale of Australian dollar-denominated bonds to Japanese investors also helped underpin the local currency, Jansen of National Australia Bank said.

Landwirtschaftliche Rentenbank, Germany's refinancing agency for banks that lend to farms and foodmakers, yesterday sold A$1 billion ($720 million) of 5.12 percent bonds maturing Aug. 23, 2007, to Japanese individuals.

To contact the reporter on this story: Sineva Toevai in Wellington stoevai@bloomberg.net

Last Updated: August 19, 2004 20:43 EDT