By MarketWatch LONDON (MarketWatch) -- The U.S. dollar was weaker versus most major counterparts Thursday, with the euro holding gains as near-term worries about Europe's sovereign debt woes continued to fade. Growing confidence that the European banks stress tests set to be published at the end of next week will boost transparency and confirm limited risks to the financial sector have served to buoy the euro, which has rebounded strongly from a low below $1.19 versus the dollar early last month, said Peter Rosenstreich, currency strategist at ACM in Geneva. The euro (CUR_EURUSD 1.2840, +0.0104, +0.8165%) traded at $1.2813 in recent action, up from $1.2743 in North American trade late Wednesday. The euro extended gains as it moved through important chart resistance at $1.2750, with chart traders targeting the $1.30 level as an important test for the single currency. An auction of 3 billion euros ($3.8 billion) of Spanish 15-year government bonds attracted strong demand Thursday. The yield premium demanded by investors to hold Spanish debt over German bonds narrowed. The sale followed successful auctions of Italian, Portuguese and German debt on Wednesday. Read about the Spanish bond auction. The euro also appeared to find some support on news that Piraeus Bank is seeking to buy substantial stakes in two smaller Greek banks. "Allowing weaker banks to be absorbed could reduce the risk of bank failure and provide an alternative to government support," said Jane Foley, research director at Forex.com. Meanwhile, U.S. stock index futures turned higher after J.P. Morgan Chase (JPM 40.54, +0.19, +0.47%) beat earnings expectations. Read Indications. The resulting boost in risk appetite put added pressure on the U.S. dollar, strategists said. The dollar tends to lose ground as investors seek riskier assets. The dollar index (DXY 82.83, -0.59, -0.71%) , which tracks the U.S. unit against a basket of six major currencies, traded at 82.946, down from 83.373 late Wednesday. The British pound (CUR_GBPUSD 1.5350, +0.0083, +0.5438%) fetched $1.5348 versus the dollar, up from $1.5266 late Wednesday. No major European economic data on tap for Thursday, but investors will pick through a range of U.S. figures later in the session, including weekly jobless claims, June producer prices and the Empire State index, all set for release at 8:30 a.m. Eastern. Industrial production data and the Philadelphia Fed index are set for release later in the day. The dollar (CUR_USDYEN 88.1000, -0.3100, -0.3506%) fell to ¥88.13 from ¥88.31 late Wednesday. The dollar lost ground to the yen, which got a boost in Asian activity after the Bank of Japan hiked its growth projection for the fiscal year which began in April to 2.6% from its previous estimate of 1.8%. As widely expected, the central bank kept the unsecured overnight call loan rate -- its key policy rate -- at 0.1%, where it has been since December 2008. See full story on Bank of Japan. A slowdown in Chinese growth also weighed on sentiment. China also reported a number of other indicators for June showed the nation's rapid expansion was beginning to cool as Beijing withdrew some accommodative policies. See more on China economic data. The yen, even more so than the dollar, has tended to gain ground on fears about the sustainability of global growth. The European news allowed the yen to give up some of its overnight gains, Foley said.

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