The euro reached a six-week high versus the dollar as European leaders prepared to meet tomorrow to complete a solution to the region’s debt crisis. Japan’s yen weakened against most of its major peers as European stocks approached an 11-week high, sapping demand for the safest assets. German Chancellor Angela Merkel and fellow EU leaders will return to Brussels tomorrow for a second summit in four days to discuss Europe’s bailout fund. New Zealand’s currency fell against all major peers after a report showed slowing inflation. The dollar fell. “People don’t want to be short the euro because if we do have a positive surprise tomorrow then it may rally,” said Chris Walker, a currency strategist at UBS AG in London. A short position is a bet that an asset will fall. “I think the scope for a positive surprise is low but, that said, people will be fairly cautious before the details are released.” The euro advanced 0.1 percent to $1.3946 at 7:29 a.m. New York time. It reached $1.3960, the strongest since Sept. 8. The shared European currency appreciated 0.2 percent to 106.24 yen. The yen was little changed at 76.14 per dollar. The Stoxx Europe 600 Index gained 0.2 percent, extending a 3.8 percent gain in the past two days. U.S. stock futures rose. European leaders are seeking an agreement on bolstering the region’s rescue fund, recapitalizing banks and providing debt relief to Greece to avoid contagion spreading to Italy and Spain. Greek Losses Financial companies, represented by the Washington-based Institute of International Finance, proposed a loss of 40 percent on Greek debt, said a person briefed on the matter who declined to be identified because the talks are confidential. Luxembourg’s Jean-Claude Juncker, who leads the group of euro- area finance ministers, said yesterday talks on private-sector involvement in a second aid package for Greece are focusing on losses of 50 percent to 60 percent. “Europe’s debt crisis will take five-to-10 years to resolve, so even if something comes out of tomorrow’s summit, it doesn’t mean all the problems will disappear all at once,” said Daisuke Karakama, a market economist in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan’s third-biggest listed bank. “I’m bearish on the euro.” The Dollar Index, which IntercontinentalExchange Inc. uses to track the U.S. currency against those of six U.S. trading partners, fell 0.2 percent to 76.011, extending its streak of declines to six days, the longest since the period ending July 4. U.S. Home Prices Home prices in 20 U.S. cities probably fell at a slower pace and consumer confidence hovered near a two-year low, highlighting the obstacles facing the U.S. recovery in its third year, economists said before reports today. “Once concern over Europe’s debt crisis recedes, the market focus will probably shift to whether the Fed will embark on another round of quantitative easing,” said Kengo Suzuki, manager of the foreign-bond department in Tokyo at Mizuho Securities Co. “The bias is for the dollar to be sold.” New Zealand’s dollar weakened against all 16 of its major counterparts. The kiwi declined 0.5 percent to 80.36 U.S. cents, snapping three days of gains. Consumer prices in the nation increased 0.4 percent in the third quarter from the previous three months, when they rose 1 percent, a report showed today. The data fueled speculation the central bank will signal a willingness to keep its benchmark interest rate at a record low. ‘Further Steps’ “The kiwi is performing badly today because of the inflation data and the risk of a revision of the central bank’s rate path,” UBS’s Walker said. Switzerland’s franc strengthened against all but one of its 16 major peers, advancing most against the kiwi and South Africa’s rand. It appreciated 0.2 percent against the euro to 1.2243. The Swiss National Bank expects the currency to weaken gradually on its own, although policy makers remain “ready to take further steps” if the economic growth outlook or deflationary pressure were to require it, SNB President Philipp Hildebrand was quoted as saying in an interview published today in Rzeczpospolita newspaper. The SNB remains ready to defend its 1.20 per euro cap on the franc with “full determination,” Hildebrand said, according to the newspaper’s Rp.pl website. The dollar has advanced 2.5 percent in the past six months, according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-market currencies. The euro fell 2.6 percent over the same period, the yen gained 11 percent and the Swiss franc rose 2.8 percent, the indexes show. To contact the reporters on this story: Emma Charlton in London at echarlton1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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