Jan. 11 (Bloomberg) -- The euro rose from near a three- month low against the yen after Japanese Finance Minister Yoshihiko Noda said it was appropriate for his nation to buy euro-area government bonds to support Ireland. The single currency strengthened the most against the Australian and New Zealand dollars among its 16 major counterparts amid bets Japan's bond purchases may help ease Europe's debt crisis. The dollar gained for the first time in three days versus the yen before a U.S. report that economists said will show confidence among small businesses increased. Australia's dollar fell to a four-week low as flooding in the state of Queensland worsened. China's yuan advanced the most in almost two weeks against the dollar. "The paper is going to be AAA, so of course it's going to be oversubscribed with the euro rallying," Kenneth Broux, a senior market economist at Lloyds TSB Corporate Markets in London, said of the planned European debt. "But the fact that Asian investors are going to buy these bonds isn't going to resolve the crisis in some of the countries. The euro remains a sell on rallies." The euro climbed to 107.47 yen as of 10:28 a.m. in London, from 107.12 yen in New York yesterday, when it fell to 106.83 yen, the lowest level since Sept. 14. The European currency declined to $1.2928 from $1.2951. The dollar advanced to 83.08 yen, from 82.71 yen. Europe's financial aid funds for distressed governments will sell bonds to raise as much as 34.1 billion euros ($44.1 billion) for Ireland in 2011 and 14.9 billion euros in 2012, the European Commission said last month. Increase Trust "It's appropriate for Japan to make a contribution as a leading nation to increase trust in the deal," Noda said of that bond sale at a news conference in Tokyo. "We want to buy more than 20 percent." Chinese Vice Premier Li Keqiang last week said he had confidence in Spain's financial markets and pledged more purchases of that nation's debt. China's Vice Premier Wang Qishan said on Dec. 21 his nation has taken "concrete action" to help the European Union address its debt crisis. The dollar appreciated versus the yen as economists surveyed by Bloomberg said the National Federation of Independent Business's optimism index rose to 94.5 in December, the highest since December 2007, from 93.2 in November. U.S. Confidence The Dollar Index, which tracks the greenback against the currencies of six U.S. trading partners including the euro and the yen, climbed 0.2 percent to 81.027. Australia's dollar weakened versus all of its 16 major counterparts as rising floodwaters rush toward the coastal city of Brisbane, where evacuations are under way. The Australian currency also fell after a report today showed the trade surplus narrowed in November by more than economists forecast. "The tragic situation with floods in Queensland may potentially weigh on growth," said Jonathan Cavenagh, a currency strategist in Singapore at Westpac Banking Corp., Australia's second-largest lender. "Until things settle down on that, we are not going to know the impact, but certainly it's not positive on the local currency." Australia's currency fell 1.1 percent to 98.45 U.S. cents, after dropping to 98.21 cents, the lowest since Dec. 9. The currency slipped 0.7 percent to 81.77 yen. The yuan advanced as a report showed China's foreign- exchange reserves climbed by a record last quarter and lending exceeded the government's annual target, increasing pressure on the central bank to tighten policy to rein in inflation. China's currency climbed 0.3 percent to 6.6180 per dollar, the biggest gain since Dec. 30, according to the China Foreign Exchange Trade System. Twelve-month non-deliverable forwards rose 0.3 percent to 6.4440, reflecting bets the currency will strengthen 2.7 percent in a year. --With assistance from Monami Yui, Yoshiaki Nohara and Toru Fujioka in Tokyo and Patricia Lui in Singapore. Editors: Nicholas Reynolds, Keith Campbell.

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