Nov. 18 (Bloomberg) -- The euro advanced 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 rose from near a seven-week low versus the greenback as European and International Monetary Fund officials traveled to Dublin to discuss possible support. Irish Finance Minister Brian Lenihan said the government is prepared to ask for a rescue package for its banks. The dollar and yen fell against most major counterparts as stocks and commodities gained, spurring demand for higher-yielding assets. “For the most part it’s a classic risk-on move,” said Greg Anderson, a currency strategist at Citigroup Inc. in New York. “One of the keys of these packages, why they calm market fears, is they tie Europe together. The countries won’t exit.” The euro rose 0.5 percent to $1.3598 at 10:22 a.m. in New York, after declining to $1.3448 on Nov. 16, the lowest level since Sept. 28. The single currency gained 1 percent to 113.70 yen, from 112.55 yesterday. The dollar appreciated 0.5 percent to 83.61 yen, from 83.18 yen. Europe’s shared currency pared gains after the Conference Board’s index of U.S. leading indicators rose in October for a fourth consecutive month, gaining 0.5 percent on signs the Federal Reserve was preparing to take additional action to spur the economy. The Standard & Poor’s 500 Index gained 1.6 percent, and the MSCI World Index climbed 1.7 percent. Gold rose for the first time in three days, reaching $1,358.81 an ounce, and crude oil for December delivery increased as much as 2.1 percent to $82.14 a barrel in New York. Jobless Claims The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against a basket of six currencies, dropped for a second day on reduced demand for a refuge as fewer U.S. workers than forecast filed claims for unemployment benefits last week. The measure fell 0.5 percent to 78.691 as initial applications in the week ended Nov. 13 increased to 439,000, from 437,000 the prior week. The Swedish krona advanced the most in two weeks against the dollar. Norway’s krone appreciated for the second day after a run of eight straight losses. “In the short term, the market is talking about Ireland, but as this dies down the question will be: who is next?” said Aroop Chatterjee, a currency strategist at Barclays Plc in New York. “This uncertainty will continue to weigh on the euro. Sweden and Norway have underperformed the other risky currencies and we would expect these to respond strongly to any positive Irish headlines.” Krona’s Jump The krona strengthened as much as 1.2 percent, the biggest intraday jump since Nov. 4, to 6.8439 per dollar. It appreciated 0.1 percent to 9.3592 per euro. Norway’s krone gained 0.5 percent to 5.9987 per greenback. The euro has appreciated 0.4 percent over the past week, according to Bloomberg Correlation-Weighted Indexes, a measure of 10 developed-nation currencies. The Irish central-bank governor, Patrick Honohan, said he expects the country to ask for a “substantial” bailout from the European Union and IMF to rescue its debt-laden banks. 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. The euro extended its gains after Honohan said he expects Ireland to seek a rescue worth “tens of billions” of euros. The “large loan” will “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. First Irish Official Honohan was 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. The dollar may strengthen to 88 yen should it rise above a key resistance level at 83.70, Commerzbank AG said. Resistance is an area on a chart where sell orders may be clustered. “The outlook is positive following the recent break above key resistance at 82.70/82.87,” Karen Jones, head of fixed- income, commodity and currency technical analysis at Commerzbank in London, wrote in an e-mailed report today. The levels are the 55-day moving average and the September low, Jones wrote. Treasury Yields Up The greenback’s losses were limited as U.S. seven-year note yields rose to a two-month high of 2.23 percent and 10-year note yields climbed to 2.94 percent, near the highest level since August. “U.S. yields are supporting the dollar,” said Barclays’ Chatterjee. 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 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 currency, nicknamed the kiwi, strengthened 0.7 percent to 77.59 U.S. cents and gained 1 percent to 64.76 yen. --With assistance from Yoshiaki Nohara in Tokyo. Editors: Greg Storey, Dennis Fitzgerald To contact the reporters on this story: Allison Bennett in New York at abennett23@bloomberg.net; Keith Jenkins in London at kjenkins3@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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