By Julie Haviv NEW YORK, Sept 28 (Reuters) - The euro rose for the fourth straight day against the dollar on Wednesday on cautious optimism Greece's lenders will give it bailout funds crucial to avoid a near-term default on its debt. Month-end two-way flows dominated euro price action, with U.S. corporations and speculators selling the single-currency as central banks bought it, a trader said. The euro was also supported by data showing inflation in Germany ticked up. That should ease pressure on the European Central Bank to lower rates. EU and IMF inspectors return to Greece on Thursday to decide whether Athens has done enough to secure a new batch of aid vital to avoid bankruptcy. Germany suggested a new bailout may have to be renegotiated. For story see [ID:nL5E7KS0AC] Finland on Thursday voted to grant additional powers to the euro zone bailout fund, giving support to the euro. The proposal, which euro zone leaders agreed to in July, needs to be approved by the parliaments of all the euro zone nations. "With 10 of the 17 member eurogroup having ratified a bailout fund, there is no question that Europe is clearing each hurdle slowly and inching closer to a broader and more ambitious plan to expand their resources and prevent contagion," said Kathy Lien, director of currency research at GFT Forex. In late morning New York trade, the euro was up 0.2 percent at $1.3618 EUR=, but down from a one-week high of $1.3690 hit in the overseas session in which a U.S. investment bank was cited as a large buyer. If European policymakers do not acknowledge that a Greece deal is in the works quickly, the relief rally could come to an end, Lien said. "Although currencies and equities have held on to their gains, the price action in the market suggests that the patience of investors is wearing thin," Lien said. Fears of a near-term Greece default and its impact on Europe's banking system is largely behind the euro's slide of about 5.2 percent against the dollar this month. It has gained 1.8 percent so far this year. Talk of proposals to leverage up the region's 440 billion euro rescue fund -- the European Financial Stability Facility -- buoyed demand for riskier assets this week. But media reports suggested a split had opened within the euro zone over Greece's bailout terms, highlighting one of the many hurdles lying ahead for policymakers trying to resolve the debt crisis. [ID:nL5E7KS00J] <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For more news on euro zone crisis [ID:nL6E7HL0JK] For Euro Zone Crisis page link.reuters.com/jyr68r For an Interactive timeline link.reuters.com/rev89>Insider TV link.reuters.com/taq93s ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> "Markets remain intensely focused on European developments, where only slow and tentative progress in addressing the region's debt crisis is being made," said Nick Bennenbroek, head of currency strategy at Wells Fargo in New York. "European currencies are higher, although the sense is that the region's currencies remain vulnerable to 'surprise' headlines." Market participants said risky assets should be supported by demand from money managers adjusting their portfolio weighting to compensate for the fall in value of some assets. "After the weekend when there was talk about leveraging the EFSF to around 2 trillion euro, markets have gone marginally more risk seeking," said Jeff Kendrew, currency strategist at Nomura. "You've got that and month-end and quarter-end refinancing flows which are positive for the euro given its sell-off this month." The dollar fell 0.4 percent to 76.48 yen JPY=, near a record low of 75.941 hit in August on trading platform EBS. Investors awaited a late afternoon speech by Federal Reserve Chairman Ben Bernanke to see if he offers some reaction to the market's mostly negative response to last week's Operation Twist by the U.S. central bank. Any hint that even more monetary easing may further boost the euro to the detriment of the dollar. (Additional reporting by Gertrude Chavez-Dreyfuss, Nia Williams, Neal Armstrong and Naomi Tajitsu; Editing by Andrew Hay)

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