The euro rose against the dollar and yen in Asia this morning amid speculation that the International Monetary Fund is planning an €600bn financing plan for debt-ridden Italy.
The euro climbed to $1.3300 and 103.26 yen in Tokyo afternoon trade from $1.3240 and 102.90 yen late on Friday.
In early trade the Nikkei 225 index rose 2%, South Korea's Kospi gained 2.2% and Australia's ASX 200 added 1.7%.
Italy's La Stampa newspaper reported yesterday that the IMF could bail out Italy with up to €600bn as newly installed Prime Minister Mario Monti comes under pressure to speed up austerity measures.
However, official sources in Rome said they were unaware of any request for assistance from Italy.
"This story has given the euro and Australian dollar a boost ... telling us a lot about positioning in the currency markets of late," National Australia Bank said in a client note.
However, it warned: "Note that an IMF budget increase would require parliamentary approvals from the large members such as the United States so is no 'fait accompli'."
The bank added that the possible IMF support signalled "alternatives are being desperately sought" to the existing European bailout fund, the European Financial Stability Facility.
On Friday, Italy was forced to pay a euro lifetime high rate of 6.5% on bonds due in six months.
The yields on ten-year government bonds ended last week at more than 7.3%, which is in the territory that forced Ireland, Greece and Portugal to seek international bailouts.
Italian government debt stands at 118% of the country's gross domestic product.
