Oct. 10 (Bloomberg) -- The euro rose the most in more than a year against the dollar after French and German leaders pledged to deliver a plan to support banks and repeated a commitment to keep Greece in the single-currency bloc. The dollar dropped against all of its major counterparts as global stocks advanced, sapping demand for the greenback as a haven. German Chancellor Angela Merkel and French President Nicolas Sarkozy said in Berlin yesterday they have given themselves three weeks to devise a plan to recapitalize banks and find a "durable" solution for Greece's debt load. Currencies of commodity-exporting countries rallied as raw materials gained. "There's a sense now that we're marching toward some attempt at a broader plan to support the euro area," said Alan Ruskin, global head of Group-of-10 foreign-exchange strategy at Deutsche Bank AG in New York. "We're drawing to a point where they will come up with a plan and the market is willing to give them the benefit of the doubt until we see the plan." The euro advanced 2.3 percent at $1.3689 as of 12:22 p.m. in New York, and gained as much as 2.4 percent, the most since July 2010. It traded as high as $1.3699, the strongest level since Sept. 21. The 17-nation currency rose 2.3 percent to 104.97 yen, with the Japanese currency trading little changed at 76.65 per dollar. Futures Positions The 17-nation euro remained higher as the European Central Bank is opposed Germany's push to rewrite the euro area's 12 week-old-rescue plan as leaders prepare the ground for a potential Greek default, a central bank official said. Hedge funds and other large speculators increased their net short euro positions to 82,697 contracts in the week ended Oct. 4, the most since June 2010. A short is a bet the price of an asset will fall. A Labor Department report showed Oct. 7 that employment in the U.S. rose more than forecast last month. U.S. payrolls climbed by 103,000 workers, after a revised 57,000 increase the prior month that was more than originally estimated, data showed. The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trading partners including the euro and the yen, declined 1.8 percent to 77.350. The MSCI World index of equities rallied 2.6 percent and the Standard & Poor's 500 Index rose 2.9 percent. European leaders will deliver a plan by the Group of 20 summit meeting on Nov. 3, Sarkozy said. They will do "everything necessary" to ensure banks have enough capital, Merkel said. Euro Plan "The markets are reacting to the pledge for further action," said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York. "Market positioning with regard to the euro is so short. When you take the market positioning, the payrolls on Friday, plus this pledge, that's helping to see some buying back up of euro." The shared currency also advanced as Belgium agreed to buy the local consumer-lending unit of Dexia SA, ending a 15-year cross-border experiment with France after the European debt crisis deepened. Belgium will pay 4 billion euros ($5.5 billion) for the division and guarantee 60 percent of a so-called bad bank to be set up for Dexia's troubled assets, Finance Minister Didier Reynders said at a press conference today in Brussels. The euro stayed higher even as a report showed European investor confidence fell to the lowest in more than two years. An index measuring sentiment in the euro region declined to minus 18.5 in October from minus 15.4 in September, the Limburg, Germany-based Sentix research institute said in an e-mailed statement today. That's the lowest since July 2009.

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