The euro rose from near a two-week low against the dollar and yen after Chinese Vice Premier Wang Qishan said his nation had taken “concrete action” to help the European Union with its debt problems. The single currency pared its gains and the Swiss franc strengthened after Moody’s Investors Service put Portugal’s credit rating on review for a possible downgrade. The dollar weakened as tensions eased in the Korean Peninsula, reducing demand for the U.S. currency as a haven. Asian and European stocks rose. “The comments by the Chinese vice premier at face value are a positive for the Europe and the euro because we have an additional provision of liquidity,” said Ulrich Leuchtmann, Frankfurt-based head of currency strategy at Commerzbank AG. “It’s good news in the short run.” The euro climbed 0.2 percent to $1.3155 as of 10:08 a.m. in London, from $1.3131 yesterday, when it dropped to $1.3095, the lowest since Dec. 2. The common currency gained 0.1 percent to 110.12 yen after paring earlier gains. It fell to 109.58 yen yesterday, the weakest since Dec. 7. The Japanese currency rose to 83.71 per dollar, from 83.77, after reaching 83.57, the strongest since Dec. 14. The euro gained on speculation investments by China, which holds a record $2.65 trillion in foreign-exchange reserves, will ease Europe’s sovereign fiscal crisis and boost the allure of assets in the region. Largest Partner The EU is China’s largest trade partner and the Asian nation is Europe’s second-biggest export market, with bilateral trade increasing 33.1 percent in the 11 months through November from a year earlier to $433.88 billion, China’s customs department said on Dec. 10. “EU members have taken a number of steps to actively respond to the sovereign-debt crisis,” Wang said at a forum in Beijing today. “We hope these measures will quickly produce results and lead to a steady recovery of the EU economies.” The euro’s gains were limited by speculation some European nations will struggle to raise funds amid a slew of credit- rating and outlook changes. Moody’s today placed Portugal’s A1 long term and Prime-1 short-term government bond ratings on review for possible downgrade. The agency last week cut Ireland’s by five levels and put Greece on review for a possible “multi-notch” decrease. The company said on Dec. 15 it may lower Spain’s creditworthiness. Standard & Poor’s is reviewing its assessments of Ireland, Portugal and Greece. Further Downgrades Moody’s announcement came after Portugal today said its central government budget deficit narrowed in the 11 months through November, the first annual reduction in the shortfall this year. The government plans to cut state workers’ wages and raise taxes to convince investors it can narrow the euro region’s fourth-biggest budget gap. “We should expect a string of potential multi-notch downgrades in late January and early February,” said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp., the nation’s second-biggest lender. “We get a number of reviews at the end of January, a heavy auction schedule and a shorter month due to holidays at the beginning and end of the month. We’re surprised that euro isn’t lower.” The common currency will strengthen to $1.33 by March 31, according to the median forecast of 45 analysts polled by Bloomberg News. The Swiss franc strengthened as investors sought a haven from fluctuations in the euro. Dollar Slips “Peripheral European currencies, which are backed up by strong economic fundamentals, like the Swiss franc, have strengthened,” said Henrik Gullberg, a currency strategist at Deutsche Bank AG in London. The franc appreciated 0.5 percent to 95.99 centimes against the dollar. It erased declines to trade 0.3 percent stronger at 1.2626 per euro, after touching to 1.2636, a record since the creation of the common currency. The dollar slipped against the majority of its most actively traded counterparts as risk appetite was boosted by an easing of military hostility in the Korean Peninsula. A U.S. negotiator said North Korea agreed to let inspectors visit its uranium enrichment facilities after the communist nation refrained from retaliating to South Korean military exercises in disputed waters yesterday. “Everything that points to a calming down of concerns regarding Korea should be moderately bad for the dollar,” said Commerzbank’s Leuchtmann in a telephone interview. Year-End Purchases The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners including the euro, yen and pound, slumped 0.2 percent. European and Asian stocks advanced and U.S. equities futures rose. The yen climbed to a one-week high versus the dollar on speculation Japanese exporters purchased the nation’s currency as the end of the year approaches. “There’s talk of Japanese exporters buying their currency,” said Takashi Kudo, general manager of market information services at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp. “This may be related to seasonal factors such as the end of the month and year.” Japan’s large manufacturers expect the yen to trade at an average of 86.47 per dollar in the year through March, the highest since the Bank of Japan’s Tankan business-confidence survey included the yen-forecast question in 1996, compared with the 89.66 predicted in September, the survey showed Dec. 15. Fumio Ohtsubo, president of Panasonic Corp., the world’s largest maker of plasma televisions, said this month the yen’s appreciation is making it tougher for the company to compete with its South Korean rivals, such as Samsung Electronics Co. The yen has risen 11 percent versus the won this year. New Zealand’s currency gained for a second day as prices rose for commodities, which are account for a majority of its exports. Copper climbed for a third day from London to Shanghai and oil rose. The so-called kiwi strengthened 0.4 percent to 74.50 U.S. cents. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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