Euro up on German-French accord on Greek rescue

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TOKYO: The euro climbed against the dollar in Asia on Thursday after news that Germany and France have reached an agreement on an aid strategy for Greece, boosting optimism despite a lack of details on the plan.

The euro rose to $1.4258 in Tokyo morning trade from $1.4212 in New York late Wednesday. The European single currency also gained to 112.23 yen from 111.88 yen. The dollar edged down to 78.72 yen from 78.77 yen.

Amid hopes that progress on Greek aid would be made at a eurozone summit later in the day, the euro gained on news about the German-French agreement on a "joint position" concerning a Greek rescue package.

The agreement between German Chancellor Angela Merkel and French President Nicolas Sarkozy would be the basis for discussions at the eurozone summit, according to a French delegation source.

The aim of their discussions was to find a Franco-German position that would be given the go-ahead by the European Central Bank to save debt-ridden Greece and contain the debt crisis that has shaken eurozone economies.

Italy and Spain, which have much larger economies and debts than Greece, have come under strong bond market pressure this month, fuelling fears of a spreading crisis.

The agreement raised hope for a near-term solution to the Greece debt crisis but "it is difficult to assess the German-French agreement itself," Junya Tanase, chief currency strategist at J.P. Morgan in Tokyo, told.

Tanase noted the euro came off earlier highs as there were no details from the meeting.

"The market is now waiting to see what the expected Greek aid package looks like," said Dai Sato, dealer at Mizuho Corporate Bank.

"The focus is on whether it would contain specific measures so as to dispel concern over the Greek debt problem for the time being," Sato said.

The market did not move on data showing a surprise Japanese trade surplus of $897 million in June, which illustrated Japan's ongoing recovery from the devastating impact of the March earthquake and tsunami.

It was the first black ink in three months, despite the market forecast for a deficit.

"The size of surplus was not too big. The data was positive for the yen but the market moved little on it," Sato said. (AFP)