Tuesday June 16, 12:03 PM
Euro advances on German economy confidence
LONDON (AFP) - The euro jumped against the dollar on Tuesday as investors' confidence in the German economy rose for an eighth month running, traders said.
In late morning trading in London, the European single currency climbed to 1.3899 dollars from 1.3793 dollars in New York late on Monday.
Against the Japanese currency, the dollar dropped to 96.50 yen from 97.83 yen on Monday.
A key signal that the German economy, the biggest in Europe, could be past the worst of the crisis flashed on Tuesday when the ZEW confidence index surged in June to the highest level for more than three years.
The ZEW index, which measures the confidence of financial markets players, soared by 13.7 points from May to 44.8 points, the institute said, the highest level since May 2006.
Analysts had expected a much smaller gain to 37 points in Germany, which is in the midst of its worst recession since World War II.
"June's sharper-than-expected rise in the German ZEW index confirms that a growing majority of investors expect economic conditions to improve," said Jennifer McKeown, European economist at the Capital Economics consultancy.
"However, the pick-up will clearly come from an extremely weak starting point."
The euro also won support from a report that Moscow would discuss a reserve currency at a summit meeting being held in Russia on Tuesday between leaders of the so-called BRIC nations - Brazil, Russia, India and China, dealers said.
There is speculation that China could be seeking to reduce the role of the dollar in the international financial system.
On Monday the single currency had taken a beating owing to weak employment data in the eurozone and worries that the region's crisis-hit banks will suffer bigger-than-expected write-downs.
Elsewhere on Tuesday, Japan's central bank left its key interest rate unchanged at 0.1 percent, while upgrading its assessment of the world's number two economy for a second month in a row.
"Japan's economic conditions, after deteriorating significantly, have begun to stop worsening," the Bank of Japan said in a statement. "Japan's economy is likely to show clearer evidence of levelling out over time."
In London trading on Tuesday, the euro was changing hands at 1.3899 dollars against 1.3793 dollars late on Monday, at 133.86 yen (134.92), 0.8451 pounds (0.8455) and 1.5072 Swiss francs (1.5061).
The dollar stood at 96.50 yen (97.83) and 1.0864 Swiss francs (1.0920).
The pound was at 1.6416 dollars (1.6312).
On the London Bullion Market, the price of gold rose to 936.75 dollars an ounce from 932.25 dollars an ounce late on Monday.
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