The yen weakened as European stocks advanced after Group of 20 policy makers endorsed parts of a plan to halt Europe’s debt crisis, sapping demand for the assets perceived to be the safest. The euro reached a one-month high against the dollar, holding last week’s biggest gain in more than two years. The yen approached a one-month low versus the greenback before a report forecast to show manufacturing in the New York region contracted at a slower pace in October. Australia’s dollar snapped a three- day advance before the central bank tomorrow releases minutes of an Oct. 4 meeting when policy makers signaled slowing inflation would enable them to cut interest rates if needed. “Risk appetite is still on a firmer footing,” said Chris Walker, a currency strategist at UBS AG in London. “There are two main drivers: the anticipation that euro-region policy makers are putting something together on the crisis and the idea that the U.S. data is starting to moderate. While the data isn’t amazing, it is picking up.” The yen weakened 0.4 percent to 107.59 per euro at 10:02 a.m. London time. It depreciated 0.3 percent to 77.41 per dollar after reaching 77.49 on Oct. 12, the weakest since Sept. 12. The euro rose 0.1 percent to $1.3894 after climbing to $1.3914, the most since Sept. 16. The shared European currency advanced 3.8 percent last week, the most since the period ended March 20, 2009. G-20 Deadline G-20 policymakers set an Oct. 23 summit of European leaders in Brussels as the deadline for the European crisis plan to be delivered after meeting in Cannes this past weekend. G-20 leaders will meet Nov. 3-4 in Cannes, France. The yen fell against all 16 of its major peers, dropping most against South Korea’s won and Taiwan’s dollar. The Stoxx Europe 600 Index added 1.4 percent, extending its longest weekly winning streak since April. Hurdles to overcome for a sovereign debt crisis accord include resistance from bankers to a deeper restructuring of Greek debt as well as disagreements between Europe’s capitals over how to multiply the firepower of their bailout fund and recapitalize financial institutions. Greece’s parliament faces another vote on new fiscal measures as soon as this week, a showdown that Prime Minister George Papandreou needs to win to ease the way for more foreign financing. ‘Baked Optimism’ “There’s a lot of optimism baked in to the euro in the past week or so,” said Jeremy Stretch, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce in London. “The euro-zone has a history of promising a lot and delivering something less-than-expected. There’s still huge scope for disappointment here.” Europe’s plan, which has still to be made public, includes writing down Greek bonds by as much as 50 percent, establishing a backstop for banks and increasing the strength of the 440 billion-euro temporary rescue fund known as the European Financial Stability Facility, people familiar with the matter said last week. “I’d expect there to be a fair bit of dissent amongst European leaders and some of that is likely to leak out,” said Mike Burrowes, a currency strategist at Bank of New Zealand Ltd. in Wellington. “My bias for euro, kiwi, Aussie and the like is to buy dips, as we are getting closer to a package and that will see a stabilization in sentiment.” Economic Index The euro has advanced 1.4 percent in the past month, according to Bloomberg Correlation-Weighted Currency Indexes, which track 10 developed-nation currencies, trimming its loss over the past six months to 1.9 percent. IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six U.S. trading partners,including the pound and the yen, was 0.2 percent lower at 76.49. It earlier today reached 76.44, the lowest level since Sept. 16, on reduced demand for a refuge in the world’s main reserve currency. The Federal Reserve Bank of New York’s general economic index was minus 4.0 in October, according to 49 economists surveyed by Bloomberg, up from minus 8.8 in September. Readings less than zero signal companies in the so-called Empire State Index, which covers New York, northern New Jersey, and southern Connecticut, are cutting back. Aussie Falls Australia’s dollar was little changed at $1.0341 after climbing to $1.0346 on Oct. 14, the strongest level since Sept. 19. Reserve Bank of Australia Governor Glenn Stevens left the nation’s benchmark rate unchanged at 4.75 percent on Oct. 4 and said “an improved inflation outlook would increase the scope for monetary policy to provide some support to demand, should that prove necessary.” Traders are betting policy makers will cut the cash target by at least 25 basis points by the end of this year, interbank cash-rate futures show. “After such a big move, the Australian dollar getting a few wobbles is certainly understandable,” said Gavin Stacey, chief interest-rate strategist at Barclays Capital in Sydney. “Once you’ve had such a large move, you become more susceptible to downside surprises for any disappointment on RBA or the global policy front.” To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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