The euro gained for a second day against the dollar and the yen on optimism a bailout for Ireland will prevent contagion across the region’s larger debt markets. The 16-nation currency advanced from near a seven-week low versus the greenback as European Union and International Monetary Fund officials traveled to Dublin to discuss possible aid for Ireland’s bank. Irish central bank Governor Patrick Honohan said he expects the country to ask for a “substantial” bailout from the EU and the IMF to rescue its battered banks. The dollar and the yen weakened as stock markets gained. The Korean won strengthened against all its 16 most-actively traded peers after a report showed department-store sales climbed. “An announcement of a support package for Ireland could lead to a calmer period in the market, and that’s supporting the euro,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “Risk sentiment has improved, and that’s weakened the dollar to some extent.” The euro advanced 0.9 percent to $1.3647 as of 9:14 a.m. in London, after declining to $1.3448 on Nov. 16, the lowest level since Sept. 28. The single currency rose 0.8 percent to 113.45 yen. The dollar traded at 83.13 yen, from 83.18 yen yesterday. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against a basket of six currencies, dropped for a second day before a report that economists said will show U.S. jobless claims rose last week. The Index fell 0.7 percent to 78.506. The MSCI World Index of shares rose for a second consecutive day, gaining 0.8 percent. Honohan Remarks Ireland’s government will hold talks with the EU, IMF and the European Central Bank “over a number of days,” a Finance Ministry spokesman said yesterday. Discussions will be held at the Irish central bank, the country’s bond agency and the Finance Ministry. The euro extended its gains after Honohan said he expects the country to ask for a bailout from the EU and the IMF worth “tens of billions” of euros. Honohan is the first Irish official to publicly say that the nation will need aid. A final decision hasn’t been reached, and Ireland will probably pay an interest rate close to 5 percent, he said in an interview with Irish broadcaster RTE. “It will be a large loan because the purpose of the amount to be made available or to be advanced is to show Ireland has sufficient firepower to deal with any concerns of the market,” said Honohan. He spoke from Frankfurt, where he is attending a regular European Central Bank Governing Council meeting. ‘Irish Problem’ “The Irish problem looks like it will be solved,” said Adam Carr, a senior economist in Sydney at ICAP Australia Ltd., a unit of the world’s largest interdealer broker. “The euro is managing to find some support.” European policy makers will scan the books of Ireland’s debt-laden banks to determine whether the government can fix the banking system on its own or needs to fall back on the 750- billion-euro ($1 trillion) European Financial Stability Fund. Spain is scheduled to sell as much as 4 billion euros of 10-year and 30-year bonds today. The euro has appreciated 0.5 percent over the past week according to Bloomberg Correlation-Weighted Indexes, a measure of 10 developed-nation currencies. The dollar is up 0.7 percent and the yen is down 0.1 percent, the indexes show. Jobless Claims The dollar declined against all of its 16 most-active counterparts before the Labor Department releases its weekly unemployment data today. The number of U.S. citizens filing initial jobless claims rose 6,000 to 441,000 last week, according to a Bloomberg survey. The U.S. central bank risked a worsening outlook for inflation and jobs if it hadn’t embarked on its new asset purchase plan, Boston Fed President Eric Rosengren said yesterday. Fed Governor Kevin Warsh, Minneapolis Fed President Narayana Kocherlakota, Cleveland Fed President Sandra Pianalto and Philadelphia Fed President Charles Plosser are all scheduled to speak today. “The dollar has yet to switch to a bullish trend with high unemployment,” said Hitoshi Asaoka, senior strategist at Mizuho Trust & Banking Co. in Tokyo. “It’s not like the Fed can start raising rates in the next few months.” The Fed is buying about $75 billion in Treasuries per month through June to spur employment and inflation in a tactic called quantitative easing. The central bank acquired $1.7 trillion of Treasuries and mortgage debt under a previous program that ended in March. Korean Won South Korea’s won rose from a seven-week low as official data showed sales at major department stores increased at the fastest pace in eight months in October, signaling that the recovery in Asia’s fourth-biggest economy is intact. The currency gained the most in five weeks and the Kospi index rose the most since Nov. 1. Sales at the three largest department stores climbed 13.3 percent in October, after having risen 6.4 percent in September. “Stronger department-store sales may signal that domestic demand is helping the economy recover,” said Sung Jae Man, a currency analyst at Tong Yang Securities Inc in Seoul. “A robust economy will help boost demand for the country’s currency.” The currency rose 0.9 percent, the most since Oct. 13, to 1,134.53 per dollar. It reached 1,444.45 yesterday, the weakest level since Sept. 29. Taiwan’s dollar strengthened as data showed the economy grew more than 8 percent for a fourth quarter. Taiwan Dollar Taiwan’s economy grew 9.8 percent in the third quarter from a year earlier, according to data from the statistics bureau. The median estimate in a Bloomberg News survey of 17 economists was for an increase of 8.34 percent in gross domestic product. The economy may grow 9.98 percent this year and 4.51 percent in 2011, the official said. “The currency’s rise is supported by strong fundamentals as Taiwan’s economy keeps expanding,” said Eric Hsing, a fixed- income trader at First Securities Inc. in Taipei, before the data were published. The Taiwan dollar strengthened 0.2 percent to NT$30.397 against its U.S. counterpart. The currency climbed to NT$30.015 on Nov. 12, the strongest since March 2008. New Zealand’s currency rose for a second day after a government report showed producer prices climbed last quarter more than twice as fast as economists had predicted. “Given the extent of the upside surprise, we’ve seen markets sit up and take notice,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “It’s another factor strengthening the case for Reserve Bank of New Zealand rate hikes from early next year.” The so-called kiwi rose 0.9 percent to 77.74 U.S. cents, and gained 0.8 percent to 64.62 yen. To contact the reporters on this story: Keith Jenkins in London at kjenkins3@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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