By James Ramage

The dollar fell against the yen Friday after word that the U.S. economy grew more slowly than expected in the last three months of 2014, tempering market expectations for higher interest rates.

Investors moved into assets they perceived as safe, such as Treasury bonds, gold and the Japanese currency, as they weighed the impact of a possible U.S. slowdown amid sluggish global growth.

The dollar fell to 117.63 yen in afternoon trade, down 0.6% for the day.

U.S. gross domestic product grew 2.6% in the fourth quarter, the Commerce Department said Friday. The pace of growth was below economists' average estimate of 3.2%. By comparison, the economy grew 5% in the third quarter and 4.6% in the second quarter after contracting in the first three months of the year.

"The dollar lost general ground after U.S. growth proved slower than expected last quarter, adding strength to market views the Fed might wait longer to boost interest rates," Joe Manimbo, senior market analyst at Western Union, wrote in a research report.

Investors had been betting that improving U.S. data would underpin the Fed's signals that it might raise interest rates around the middle of 2015, sooner that the Bank of Japan or the European Central Bank would. Higher U.S. interest rates would increase returns on assets denominated in the currency, bringing more investors to the dollar.

But the weaker U.S. growth estimate appeared to undercut the Federal Reserve's latest assessment of the economy's recovery, one factor the central bank uses to guide its decision about when to raise interest rates from near zero.

Still, the U.S. growth was better than that expected for Japan and the eurozone.

"Growth numbers, even though a slight disappointment, gives the Fed the luxury of patience" regarding higher interest rates, said Alfonso Esparza, senior currency analyst at the retail brokerage Oanda. "Other central banks have little room to play with, as growth is sluggish most everywhere else, leading many toward easing policy further."

The euro fell to $1.1295, down 0.2% for the day, and hovering near its weakest level in 11 years.

In other trade, the Norwegian krone strengthened against the dollar and the euro after the country's central bank said it will buy more of the currency for Norway's sovereign wealth fund. Doing so balances currency inflows from the oil sector with the government's spending needs.

The dollar lost 1.3% versus the krone on Friday, slipping to 7.7243. The U.S. currency has gained 3.7% against the krone this year, after rising 23% in 2014. The euro lost 1.6% versus the krone, falling to 8.7259.

Denmark's finance ministry suspended sovereign-bond issuance in an attempt to damp foreign interest in the country's assets and hinder further appreciation of the Danish krone. The Nationalbanken has cut its main interest rate three times in less than two weeks, as the krone has been strengthening against a euro weakened by looser European Central Bank monetary policy.

--Charles Duxbury contributed to this article.

Write to James Ramage at james.ramage@wsj.com