The euro strengthened for a second day against the yen after French President Nicolas Sarkozy and German Chancellor Angela Merkel said they are “convinced” Greece will stay in the currency union.
The euro rose versus 14 of 16 major counterparts after Spain sold almost all the debt it intended to at an auction today. The International Monetary Fund, European Central Bank and European Commission representatives will return to Greece this week to review the economy, and make a recommendation on the release of further loans to the nation. Switzerland’s franc weakened after the central bank said it is ready to take further steps to stop the currency rising.
The French-German statement “could help to calm markets,” said Lauren Rosborough, a senior strategist at Westpac Banking Corp. in London. “We still await to see if the sixth aid tranche will be agreed to. I’d be very surprised if it’s not.”
The euro advanced 0.2 percent to 105.62 yen at 10:09 a.m. in London, after weakening as much as 0.3 percent. The currency gained 0.1 percent to $1.3765. The dollar was little changed at 76.68 yen.
The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, declined 0.1 percent to 76.762.
Greece Commitment
The French and German leaders signaled they’re ready to keep supporting Greece following a telephone discussion yesterday with Greek Prime Minister George Papandreou. Papandreou committed to meet deficit-reduction targets demanded as a condition for further bailouts, according to the statements distributed by the governments in Athens, Berlin and Paris.
The Stoxx Europe 600 Index advanced 1.4 percent, and the MSCI Asia Pacific Index posted a 1.3 percent gain.
Spain sold 3.95 billion euros of bonds due in 2019 and 2020, the central bank said, compared with a maximum target of 4 billion euros. The debt due in October 2020 was sold to yield an average 5.156 percent, compared with 5.2 percent when it was last auctioned on Feb. 17.
China is willing to buy euro bonds from countries involved in the sovereign-debt crisis, Zhang Xiaoqiang, vice chairman of the country’s National Development and Reform Commission, said yesterday at the World Economic Forum in Dalian. Premier Wen Jiabao earlier said developed nations must “put their own houses in order,” cut deficits and open markets rather than rely on China to bail out the world economy.
Franc Falls
The franc declined against the euro after the Swiss National Bank said it’s ready to take “further measures” if needed to stem gains in the currency and left its benchmark interest rate at zero to ward off the threat of a recession.
The SNB last week imposed a franc ceiling of 1.20 against the euro. The central bank also said today it will defend the level with “utmost determination.”
UBS AG, Switzerland’s biggest bank, said today it may post a loss in the third quarter because of a $2 billion shortfall from unauthorized trading at its investment bank.
The franc weakened 0.3 percent to 1.20830 per euro. It was little changed against the dollar at 87.66 centimes.
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