The euro climbed to $1.3312 and 103.31 yen in Tokyo morning trade from $1.3240 and 102.90 yen late Friday in New York where the single European currency had fallen at one point to $1.3212, its lowest point since October 4.

The dollar edged down to 77.61 yen from 77.72 yen.

The euro slumped Friday on mounting concerns that the eurozone's political leaders would not be able to solve the bloc's worsening debt crisis.

But the Italian newspaper La Stampa reported Sunday that the IMF could bail out Italy with up to 600 billion euros ($800 billion) as newly installed Prime Minister Mario Monti came under pressure to speed up austerity measures.

"This story has given the euro and Australian dollar a boost at the open this morning, telling us a lot about positioning in the currency markets of late," National Australia Bank said in a client note.

"Note that an IMF budget increase would require parliamentary approvals from the large members such as the United States so is no 'fait accompli'".

The bank added that the possible IMF support signalled "alternatives are being desperately sought" to an existing European bailout fund, known as the European Financial Stability Facility.

A dealer at a major Japanese bank said his bank "will wait for London investors to join the market for full-fledged trading."

"But since the euro has been sold so aggressively, we wanted to have some factors to buy some euro(s) back," he told Dow Jones Newswires.