(RTTNews) - The euro edged higher against the currencies of the U.S. and Japan in early deals Wednesday as European stocks rallied on hopes that a plan for recapitalizing European financial institutions will be unveiled later today. The European Commission president Jose Manuel Barroso suggested yesterday that he would announce proposals to support the region's troubled banks and also measures to strengthen the EFSF. Yesterday, Slovakia voted down a proposal for enhancing the powers of EFSF. Concerns that the eurozone debt crisis will be resolved after Troika indicated Greece will get its next tranche of EUR 8 billion loan next month and some media reports suggesting that Slovak Parliament may hold a new vote on EFSF expansion as early as this week also added upbeat sentiment. Thus far, U.K.'s FTSE 100 index advanced 0.47 percent, Germany's DAX climbed 1.35 percent and France's CAC-40 index rose 1.5 percent. Better-than-expected eurozone industrial production in August also lifted risk-appetite, with production rising to a second consecutive month after a marginal decline in June. The seasonally adjusted industrial output increased 1.2 percent on a monthly basis in August, following an upwardly revised 1.1 percent rise in July. Economists expected a 0.8 percent fall. Year-on-year, industrial production in Eurozone increased 5.3 percent, following a 4.4 percent rise in July. Economists expected production to rise 2.1 percent. Risk-appetite waned in the Asian session as negative events such as Slovak Parliament's failure to pass the EFSF expansion bill, Alcoa's disappointing earnings results, anti-China FX bill in the US Senate and Harrisburg City Council filing for bankruptcy trimmed risk-appetite in the market, analysts at Westpac noted. The European currency touched nearly a 4-week high of 1.3817 against the US dollar and 105.84 against the Japanese yen around 6:10 am ET and both pairs held steady thereafter. The next likely upside target are seen at its 50-day simple moving average levels of 1.3950 against the greenback and 107.30 against the yen. The common currency that climbed nearly a 3-week high of 0.8789 against the pound around 5:00 am ET reversed direction shortly thereafter. The euro-pound pair thus dropped beyond its Asian session low of 0.8740 and the pair is presently trading at 0.8737. U.K. claimant count increased 17,500 in September from August, data from the Office for National Statistics said today. But the increase was below the 24,000 monthly rise forecast by economists. The annual increase in earnings including bonus came in at 2.8 percent three months to August, down 0.1 percentage point between the three months to July.

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