The euro stabilised against the dollar on Thursday after losing ground on positive US manufacturing and jobs data, as traders focused on an EU summit to shield the eurozone from financial turbulence.
At issue at the meeting in Brussels is a plan to create a mechanism that from mid-2013 would stand ready to provide financial assistance to crisis-hit eurozone members.
"It will be decisive for the foreign exchange markets whether the EU will today agree on clear principles for a permanent crisis mechanism," said analysts at Commerzbank in a research note.
"The exact form of this mechanism is not that important from the point of view of the foreign exchange market. It will be more important for the euro whether the result reached in Brussels is likely to provide a sustainable solution for the eurozone debt crisis."
The euro in late-day trade was at 1.3213 dollars against 1.3211 late Wednesday.
The dollar was meanwhile trading at 84.31 yen, up from 84.23 on Wednesday.
On European bond market prices edged lower as investors, cheered by the US data, put their money in stocks.
The yield on Greek bonds was little changed, edging up to 11.867 percent from 11.859 percent on Wednesday as Moody's warned it might further downgrade the country's sovereign bond rating on doubts about its capacity to ease its debt burden.
The US statistics had earlier depressed the euro.
New claims for US unemployment benefits fell last week to almost the lowest level of the year to 420 000, down 3 000 from the prior week's revised reading of 423 000, the Labor Department said.
The decline beat forecasts of a rise to 425 000.
The data was "quite positive sign for the sluggish recovery of the labor market," said Natixis analyst Mufteeva Inna.
Other data also showed a 3.9 percent surge in construction of new US housing in November, led by a sharp rebound in starts of single-family homes, the government reported.
In London on Thursday, the euro changed hands at 1.3213 dollars against 1.3211 dollars late in New York on Wednesday, 111.40 yen (111.30), 0.8469 pounds (0.8497) and 1.2790 Swiss francs (1.2788).
The dollar stood at 84.31 yen (84.23) and 0.9680 Swiss francs (0.9676).
The pound was at 1.5600 dollars (1.5543).
On the London Bullion Market, the price of gold dropped to 1,363 dollars an ounce at the fixing from 1,388.75 dollars late on Wednesday.
