By Matthew Brown and Yoshiaki Nohara March 8 (Bloomberg) -- The yen and the dollar fell against higher-yielding currencies on speculation that wealthier European nations would rescue Greece financially if needed, reducing the perceived risk of debt defaults throughout Europe. The euro rose against the U.S. currency for a second day after French President Nicolas Sarkozy said yesterday that euro- region nations are “ready” to help Greece. The yen fell against all 16 of its major counterparts as stocks rose in Europe and Asia, damping demand for the currency as a haven. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments fell for a seventh-straight day. “The market is getting more comfortable that Greece’s problems are not going to spill over to other countries, such as Spain and Portugal,” said Paul Robinson, a currency strategist at Barclays Capital in London. “Riskier currencies are outperforming the safer ones.” The yen fell 0.4 percent to 123.44 per euro as of 8:25 a.m. in London, and traded at 90.31 per dollar from 90.28 in New York on Friday. The dollar dropped 0.3 percent against the euro and 0.7 percent against the Korean won. Futures traders decreased bets the euro will decline against the dollar, figures from the Washington-based Commodity Futures Trading Commission showed. The difference in the number of wagers by hedge funds and other large speculators on a decline in the euro compared with those on a gain -- so-called net shorts -- was 66,770 on March 2, compared with net shorts of 71,623 a week earlier. U.S. Support Greek Prime Minister George Papandreou meets U.S. Secretary of State Hillary Clinton in Washington today and President Barack Obama and Treasury Secretary Timothy F. Geithner tomorrow to discuss the nation’s financial crisis. “The U.S. is going to reinforce completely what France and Germany are telling” Papandreou, said Adrian Foster, head of financial-markets research for Asia at Rabobank Groep NV in Hong Kong. “That is, you need to lead the solution and other people will fall in line with assistance.” The 16-nation euro also strengthened before a report forecast to show German industrial output expanded 1 percent in January after shrinking 2.6 percent the previous month, according to a Bloomberg News survey. The Economy Ministry releases the data today. ‘Fulfill Commitments’ The euro advanced to a two-week high against the yen after Sarkozy made some of the strongest comments by a European Union leader to signal the bloc would bail out Greece. “I want to be very clear: if it were necessary, the states of the euro zone would fulfill their commitments,” Sarkozy said yesterday in Paris after a meeting with Papandreou. “There can be no doubt in this regard.” Papandreou’s government last week passed a further round of austerity measures and sold 5 billion euros ($6.8 billion) in government debt. “The important thing is that almost everyone now agrees that the Greek government has done as much as they can at this stage,” Erik F. Nielsen, chief European economist in London at Goldman Sachs Group Inc., wrote in an e-mailed note yesterday. “So, the measures were appropriately met with an avalanche of supportive words from the rest of Europe.” German Chancellor Angela Merkel, who runs Europe’s largest economy, said at a joint press conference with Papandreou on March 5 that Greece doesn’t need financial aid, as she turned her focus to restricting the use of derivatives to halt “speculators” from exploiting countries’ budget deficits. To contact the reporters on this story: Matthew Brown in London at mbrown42@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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