TOKYO: The euro firmed against the dollar and yen in Asian trade Thursday as fears overEurope'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 inTokyomorning trade, compared with $1.3108 and 106.00 yen inNew Yorklate 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.
Germanyalso 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.
Many dealers, however, stayed on the sidelines ahead of policy meetings of theUSand Japanese central banks later this month, amid speculation over whether they would usher in further monetary easing.
Asiawas also on alert overNorth Korea's planned rocket launch, which is expected in the coming days.
But Credit Suisse analyst Hiromichi Shirakawa saidIran's nuclear drive, which has caused friction with the West, is a bigger issue for markets than the North Korean rocket as it threatens to send oil prices soaring.
"We tend to turn our eye to North Korean moves now but Iranian problems will continue to be the biggest focus," he said in a note.
Iranand Western powers are meeting again inIstanbulat the weekend to hash outTehran's promised "new initiatives" on its nuclear programme, although there is little hope for an immediate breakthrough in the deadlock.