Concerns about the euro zone's sovereign debt troubles have
battered financial markets this year, even pressuring U.S. banks
on Wall Street on Monday.
The euro was up half a percent at $1.3725 <EUR=> and 0.9
percent at 123.02 yen <EURJPY=>.
"We are seeing a squeeze of some short euro positions which
were established at low levels as market speculation of a Greek
bailout is seen as positive in the near-term," said Antje
Praefcke, currency strategist at Commerzbank in Frankfurt.
The euro is down more than 4 percent against the dollar this
year and more than 7.5 percent against the yen, in part because
of concerns over debt.
The dollar was off a quarter of a percent against a basket
of major currencies <.DXY>.
MIXED STOCKS
World stocks as measured by MSCI <.MIWD00000PUS> rose 0.2
percent, lifted mainly by gains of 1 percent in their emerging
market component. Chinese and Hong Kong shares were generally
higher, cheered by higher commodity prices.
In Europe, the FTSEurofirst 300 <.FTEU3> was flat to higher
with year-to-date losses now around 6 percent.
A number of worries have hammered the market following last
year's large gains.
"Investors are rightly concerned about the timing of the
removal of extraordinary loose fiscal and monetary policy. The
risk of default has increased and there is an uncertainty over
financial regulation," said Henk Potts, equity strategist at
Barclays Wealth.
Earlier, Japan's Nikkei <.N225> edged down 0.2 percent to a
two-month closing low.
Toyota Motor Corp <7203.T>, whose shares have lost about a
fifth of their value since late January, rose on short-covering
with investors welcoming signs it was taking steps to deal with
its safety problems.
The automaker announced a recall of the Prius and other
hybrid cars for braking problems.
(Additional reporting by Atul Prakash and Neal Armstrong;
editing by Patrick Graham)