(Reuters) - The euro hovered near a six-week high versus the dollar on Monday on optimism over EU plans to leverage the region's bailout fund and recapitalize its banks, but gains were capped by disagreement over the scale of Greek debt writedowns. The dollar was flat against the yen, recovering from a record low on Friday after Japan's finance minister put traders on alert for possible renewed currency intervention to stem strength in the Japanese currency. The euro gained in early European trade after the EU neared an agreement over the weekend on bank recapitalization and euro zone officials said France and Germany were close to agreement on how to use the European Financial Stability Facility (EFSF) to stave off bond market contagion. However, serious divisions still linger over the size of the haircut private holders of Greek bonds will have to accept, with a final decision delayed until a second summit on Wednesday. "The EU seems to be nearing a conclusion on leveraging the EFSF and recapitalizing the banking system, but the size of Greek writedowns is the final sticking point," said Ian Stannard, head of European fx strategy at Morgan Stanley. "As always with the EU, you have to wait for the final agreement, but optimism is high and I think that should keep the euro supported in coming days," he added. The euro rose to $1.3955 in early European dealing after triggering stop-losses above last week's highs around $1.3915. It was last trading down around 0.2 percent for the day at $1.3863 as short-term traders quickly took profit on the early rally. "There are expectations for progress in the euro zone over the next few days but there's also plenty of room for disappointment so people are taking profits in the euro where they can," said Kathleen Brooks, head of research strategy at FOREX.com, who also highlighted Monday's weak euro zone purchasing manager surveys weighing on the euro. The euro stood well above its nine-month low plumbed earlier this month at $1.3145 and traders said it was likely to keep its positive tone at least until the conclusion of Wednesday's summit. Latest IMM data showed speculators increased their short euro positions in the week ended October 18 on skepticism over the ability of EU leaders to resolve the region's crisis. This means any moves to the topside may be exacerbated as those positions need to be bought back. Technical analysts highlighted the euro's 200-week moving average as key resistance near the pivotal $1.4000 level, together with the 61.8 percent retracement of the August to October sell-off around $1.4013. Bids were reported around $1.3850/60, while support for the euro is back at the 100-week moving average at $1.3658. Against the yen, the euro was down 0.3 percent at 105.57 yen, with Tokyo exporters seen sidelined ahead of the Wednesday EU meeting. Strength in the euro helped to pushed the dollar index to its lowest in six weeks at 76.053 before steadying at 76.406. Comments on Friday from Federal Reserve vice chair Janet Yellen that the Fed is looking at ways to offer more monetary stimulus, added to downside pressure. The dollar was flat against the yen at 76.18 yen, recovering from an all-time low of 75.78 yen hit on Friday. Japanese Finance Minister Jun Azumi said on Monday that Japan will take decisive action on excessive and speculative forex moves. He said that the greenback below 76 yen did not reflect economic fundamentals. Commodity currencies were firm as European bourses and U.S. stocks futures rose. The Australian dollar pushed above its 200-day moving average at $1.0390, last changing hands at $1.0400. (Additional reporting by Antoni Slodkowski; Editing by Anna Willard)

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