The euro rallied against the dollar and rose from almost a record low versus the Swiss franc on bets European officials are approaching an agreement over measures designed to contain the region’s sovereign-debt crisis. The 17-nation currency earlier pared gains as Germany’s Chancellor Angela Merkel told reporters that the debt crisis can’t be resolved “in one step.” Sweden’s krona and Australia’s dollar climbed amid renewed appetite for riskier assets as stocks rose on better-than-expected company earnings. The Canadian dollar advanced to an 11-week high after the central bank’s policy statement. “The tone of the euro improved, and we saw peripheral bond spreads tighten following a string of positive commentary from policy makers,” said Mary Nicola, a currency strategist at BNP Paribas SA in New York. “It looks like they’re closer on some sort of deal on Greece.” The euro rose 0.4 percent to $1.4161 at 12:02 p.m. in New York, from $1.4112 yesterday. The euro advanced 0.2 percent to 111.77 yen and strengthened 0.3 percent to 1.1570 Swiss francs after touching a record low 1.1374 yesterday. The yen gained 0.2 percent 78.91 per dollar. The Canadian dollar appreciated as much as 1.2 percent to 94.82 versus the U.S. currency, the strongest level since May 3. The Bank of Canada kept its target rate for overnight loans between commercial banks at 1 percent and said borrowing costs will increase as the economy recovers. Policy makers dropped the word “eventually” to describe the timing of their next move. Weaker Franc The Swiss franc, a haven in times of financial turmoil, weakened against all 16 of its major peers tracked by Bloomberg amid speculation a settlement by domestic banks over tax evasion by wealthy German clients may trigger outflows by Europeans who question the value of cross-border accounts. The franc was little changed at 81.70 centimes per dollar after appreciating yesterday to a record 80.33 centimes. The greenback fell against the Swedish krona and the Australian dollar as stocks rallied in the wake of better than expected sales from International Business Machines Corp. and increased earnings from European companies including Novartis AG to Nordea Bank AB. “There’s been a resurgence of risk appetite,” said Mark McCormick, a currency strategist at Brown Brothers Harriman & Co. in New York. “It supports equity prices, and that keeps the dollar down.” Sweden’s krona appreciated 0.6 percent to 6.5164 per dollar and strengthened 0.3 percent to 9.2253 per euro. Boost for Aussie The Australian dollar climbed 0.9 percent to $1.0699 even as minutes from the Reserve Bank’s last meeting damped speculation of a rate increase to combat inflation. “The Aussie shows the real driver at the moment is general risk appetite,” said Chris Walker, a currency strategist at UBS AG in London. “Equities are doing well, and we’re seeing quite a bit of dollar weakness.” IntercontinentalExchange Inc.’s Dollar Index, which gauges the greenback against the currencies of six major U.S. trading partners, slid 0.5 percent to 75.078. The Standard & Poor’s 500 Index advanced 0.8 percent. The Stoxx Europe 600 Index rose 0.8 percent after a three-day slump that pushed the gauge to the lowest close since Nov. 30. European Union leaders are preparing for a summit on July 21 to hammer out a solution to the Greek debt crisis, which pushed the euro to $1.3837 last week, the lowest since March. Debt ‘Viability’ Negotiations over a second bailout package for Greece should be “positive for the viability of the public debt” and safeguard the nation’s banking system, Greek Finance Minister Evangelos Venizelos said. The aim is to avoid even a selective default on the nation’s debt, he said in an interview, according to an e-mailed statement today from the Athens-based Finance Ministry. He said a resolution of debt turmoil is attainable. Italian 10-year bond yields dropped 24 basis points, or 0.24 percentage point, to 5.73 percent after rising yesterday to a euro-era record. Yields on German bunds increased four basis points to 2.69 percent. Merkel’s comments damped expectations that government leaders can make progress on the region’s debt problems at this week’s summit. “Those who want to take political responsibility, and that’s what the government wants and takes seriously, know that responsibly there won’t be one spectacular step” this week, Merkel told reporters in Hanover, Germany, today. “It’s entirely about creating a controlled, composed process of gradual steps and measures.” Policy makers are divided on how to prod investors into financing a new Greek bailout package and whether the euro area should issue euro bonds to help debt-laden nations tap markets. Merkel’s Stance “Merkel is downplaying expectations for the leader’s meeting on Thursday,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York. “There’s no great forward progress in resolving Greece’s debt problems.” Europe’s leaders have failed to convince investors that they are capable of solving Greece’s debt crisis, running the risk of derailing the global recovery, the International Monetary Fund said in a statement released today. To contact the reporters on this story: Catarina Saraiva in New York at asaraiva5@bloomberg.net; Paul Dobson in London at pdobson2@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

Source