The euro strengthened for a second day against the yen and the dollar 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 13 of 16 major counterparts after Spain sold almost all the debt on offer at an auction today. The International Monetary Fund, European Central Bank and European Commission representatives will visit Greece this week and later make a recommendation on the release of further loans to the nation. The franc weakened against the euro after the Swiss National Bank said it is ready to take further steps to stop the currency from gaining. “The market obviously seems to be more confident now that the most ugly scenarios that it had priced in before will not happen,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt. “At the moment the euro’s gains will be quite limited. The market will wait for the Troika’s report in Greece.” The euro rose 0.4 percent to 105.80 yen at 6:43 a.m. in New York, after weakening to a 10-year low of 103.90 yen on Sept. 12. The currency gained 0.4 percent to $1.3813 after gaining 0.6 percent yesterday. The dollar was little changed at 76.58 yen. The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, declined 0.4 percent to 76.579. Greece Commitment Sarkozy and Merkel signaled they’re ready to keep supporting Greece following a telephone discussion with Greek Prime Minister George Papandreou yesterday. 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. “It could help to calm markets but to be honest it doesn’t really resolve the problem,” said Lauren Rosborough, a senior strategist at Westpac Banking Corp. in London. “There are a lot of people who aren’t convinced Greece is going to stay as part of the euro zone. Risks to the euro still remain.” The Stoxx Europe 600 Index advanced 1.7 percent, and the MSCI Asia Pacific Index rose 1.5 percent. 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. France sold debt maturing in 2013, 2014 and 2016, and inflation-linked securities. China Willing 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 that 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. The franc declined for a third day against the euro after the SNB said it’s ready to take “further measures” if needed to stem gains in the currency and left its benchmark rate at zero to ward off the threat of a recession. The central bank last week imposed a franc ceiling of 1.20 against the euro. The SNB also reiterated today it will defend the level with “utmost determination.” “Confidence in the SNB’s ability and willingness to defend the 1.20 level is growing,” Commerzbank’s Leuchtmann said. The franc weakened 0.1 percent to 1.20589 per euro. It gained 0.4 percent to 87.26 centimes per dollar. Kiwi Weakens New Zealand’s dollar fell against most of its major counterparts after the Reserve Bank held its official cash rate at 2.5 percent and signaled no urgency to raise borrowing costs until the global recovery strengthens. “The kiwi has moved down as a knee-jerk response to the statement which was a little more dovish than expected,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp., Australia’s second-largest lender. “The RBNZ has dropped its rates track and is now closer to what swaps markets were pricing. Swaps had already priced in a rather dire global situation.” The so-called kiwi dropped 0.1 percent to 63.04 yen, and was little changed at 82.33 U.S. cents. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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