SINGAPORE, Jan. 12 (MNI) - The U.S. dollar continued with a mixed bias in Asia Wednesday, and the euro edged higher, as worries about a worsening debt crisis in the euro-zone appeared to fade, at least temporarily although tonight's Portugal bond sale would be a key factor for the currency going forward. Finance Minister Yoshihiko Noda told reporters Tuesday Japan would consider buying euro-denominated bonds to help improve the confidence in the European Financial Stability Facility scheme. Noda was also quoted as saying that Japan plans to buy about 20% of bonds to be issued jointly by euro-zone countries this month. The comments have helped sentiment on the euro somewhat, and this morning, euro-dollar climbed back above $1.3000, from an early low of $1.2965, to peak at $1.3017 before easing back to around $1.3000. "Noda said he would like to use existing euro-denominated FX reserves to fund the purchase. As such, we do not expect any FX flow to accrue from this possible future transaction, although Japan's involvement should be seen as a mild euro positive," said analysts at UBS. The early euro uptick was said to have triggered some stop-loss buy orders around $1.3000, before the pair then ran into sell orders said to be scattered around $1.3020, just ahead of more stop-losses sitting between that and $1.3025, dealers said. Market players are anxiously watching euro-zone bond sales for clues on the currency's fortunes going forward. Portugal will sell 2014 OT (government bond) and 2020 OT for between E750 million to E1.25 billion Wednesday. The auction comes at a tricky time for Portugal as the 10-year yield hovers below the 7.00% level that is considered by traders as a threshold level which both Greece and Ireland breached before requesting aid from EU/IMF. Spain announced Monday it would sell E2-E3 billion of 3.25% 2016 BONO issue January 13 and Italy is set to sell its 3.0% November 2015 BTP and 4.5% March 2026 BTP, both expected for around E6 billion, also today. The Australian dollar meanwhile continued to trade with a heavy tone through the session today, as devastating floods in Queensland threaten the state's capital city Brisbane. Earlier, Reserve Bank of Australia board member Warwick McKibbin was cited saying in the Sydney Morning Herald that the Queensland floods could shave 1% off Australia's GDP, as news emerged of tumbling export earnings and a stalling of Queensland's state economy. "If you look at the infrastructure damage and all the networks that have been broken, a hit to the economy of 1% is not out of the question," McKibbin was cited as saying. Such a hit to the economy would cost A$13 billion, the report said. But some relief for Aussie-dollar came this morning in the form of better-than-expected home loan commitments for November. The number of home loan commitments rose a seasonally adjusted 2.5% in November from a revised 2.2% rise in October, the Australian Bureau of Statistics said. The outcome was well above the median market forecast of -1.0%, and beat the most optimistic of expectations, which had been in a range of -2.5% to +1.5%. Aussie-dollar sank to a low of $0.9804 this morning but recovered marginally to around $0.9836 after the data were released. The gains extended through the morning as short positions were then covered, carrying the pair up to a late morning high of $0.9867. "The result is surprisingly strong given the interest rate backdrop in November, which saw a 25 bps rate rise from the RBA and an extra 15 bps increase in average mortgage rates from the major banks," Westpac Bank economists said in a reaction piece. "These moves will clearly still impact, however the November finance approvals suggest a somewhat firmer situation for housing market demand indeed, it suggests demand may have been doing more than just stabilizing through the third quarter and may even have been firming a little." In other currency pairs, dollar-yen traded between Y83.07 and Y83.42 in the Asian session, and was near the low end of that range at Y83.08 as European markets got underway, down from Y83.24 near the U.S. close overnight Ahead in the U.S., The Treasury will auction $21 billion in 10-year notes Wednesday and $13 billion in 30-year bonds Thursday. "Should today's Portugal sale go smoothly with appropriate yields, there could be less of a flight-to-quality bid for U.S. Treasurys," commented United Overseas Bank analysts. The market looked for a retest of the January 7 high of Y83.67 in dollar-yen, while for euro-dollar, further gains could target a test of Friday's post non-farm payroll highs near $1.3020 and potentially even the 200-day moving average, at $1.3072 today.

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