Nov. 29 (Bloomberg) -- The euro strengthened, rebounding from more than a two-month low against the dollar, as European governments handed Ireland an 85 billion-euro ($113 billion) aid package. The 16-nation currency gained against 8 of its 16 major counterparts after European finance ministers scaled back proposals to saddle bondholders with losses in future budget crises, seeking to reverse the market selloff menacing the region. The dollar traded near a two-month high against the yen as concern military action on the Korean peninsula will escalate boosted demand for the U.S. currency as a refuge. "The bailout for Ireland is providing some respite for the euro as it restores some calm and soothes some fear," said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. "It's a step in the right direction but it's not a turning point. I doubt if the worst is over for the euro." The euro appreciated 0.3 percent to $1.3287 as of 8:25 a.m. in London, reversing an earlier 0.5 percent decline to $1.3182, its weakest level since Sept. 21. The common currency was at 111.45 yen, from 111.37 yen. The dollar traded at 83.95 yen, from 84.10 yen on Nov. 26, when it reached 84.19 yen, the strongest since Sept. 28. Ireland said it will pay average annual interest of 5.8 percent on the package, which breaks down into 45 billion euros from European governments, 22.5 billion euros from the International Monetary Fund and 17.5 billion euros from Ireland's cash reserves and national pension fund. The European finance ministers agreed a future crisis-management system won't automatically cut the value of bond holdings. --With assistance from Anchalee Worrachate in London, Yoshiaki Nohara in Tokyo and Sungwoo Park and Bomi Lim in Seoul. Editors: Mark McCord, Daniel Tilles.

Source