The euro strengthened for the first time in four days against the dollar following a media report that the European Central Bank is pushing to change capital rules for banks to prevent a credit crunch. The 17-nation currency rose from an 11-month low versus the greenback after Market News International said the ECB is supporting a new proposal that would deter banks from dumping riskier assets to boost capital levels, citing sources it didn’t name. The euro also advanced as Spain prepared to sell as much as 3.5 billion euros ($4.55 billion) of bonds today. The Swiss franc jumped after the central bank refrained from introducing new measures to weaken the currency. “A little bit of less-bad news and technical factors are pushing the euro higher,� said Geoffrey Yu, a currency strategist at UBS AG in London, citing the Market News report. The euro advanced 0.2 percent to $1.3003 at 8:52 a.m. London time after falling to $1.2946 yesterday, the lowest since Jan. 11. The single currency advanced 0.1 percent to 101.43 yen. The yen was little changed at 78 per dollar. The euro gained after the currency’s 14-day relative strength index against the dollar fell to 29 yesterday, below the 30-level that some traders see as a sign an asset may be about to reverse direction. Spain aims to sell as much as 3.5 billion euros of debt maturing in 2016, 2020 and 2021 today. Italy yesterday had to pay the most in 14 years to sell five-year notes as its Parliament rushes to pass a 30 billion-euro budget plan that Prime Minister Mario Monti says will bring down borrowing costs. Franc Gains The franc gained the most in eight weeks against the euro after Switzerland’s central bank left its limit on the currency unchanged, resisting pressure from exporters to further curb its strength as officials take time to assess deflation risks. The Swiss National Bank kept the franc’s minimum exchange rate at 1.20 per euro, in line with the forecasts of nine out of 13 economists in a Bloomberg News survey. The central bank also maintained its benchmark interest rate at zero. “There had been a growing sense that the SNB may well decide not to lift the ceiling, in part because of the problematic euro,� said Michael Derks, a market strategist at FXPro Financial Services Ltd. in London. The franc is unlikely to strengthen further because “the dollar is the preferred safe haven currency at present.� The franc appreciated 0.8 percent to 1.2275 per euro after rising as much as 1 percent, the biggest gain since Oct. 20. The Swiss currency rose 1.1 percent to 94.35 centimes per dollar. The euro has weakened 1.5 percent in the past month according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar has gained 2.9 percent and the yen has advanced 1.5 percent. To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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