Euro holds firm on shrinking debt worries

TOKYO: The euro firmed against the dollar and yen in Asian trade Thursday as fears over Europe's debt problems eased following Italian and German debt auctions, and a fall in Spanish bond yields.

The single currency bought $1.3130 and 106.16 yen in Tokyo morning trade, compared with $1.3108 and 106.00 yen in New York late Wednesday. The dollar was changing hands at 80.84 yen against 80.86 yen.

"Risk aversion is receding," National Australia Bank said in a note to clients.

"The US dollar lost some of its 'safe haven' appeal in this environment, as did the Japanese yen."

The bank added that the euro "found favour," hitting highs above $1.3150 in New York, after a $14.0 billion bond auction in Italy Wednesday while the yield on debt-riddled Spain's 10-year bonds eased to 5.86 percent from 5.94 percent.

Sentiment was also buoyed by comments from European Central Bank board member Benoit Coeure indicating the lender would not rule out additional purchases of sovereign debt.

Germany also paid sharply lower rates at a bond sale Wednesday as investors sought out the safety of the eurozone's biggest economy and paymaster.

The Japanese currency weakened amid a sell-off by short-term investors, senior dealers at major banks told Dow Jones Newswires. (AFP)