The euro surged against the dollar and the Japanese yen Wednesday as plans to aid Europe's struggling banks appeared to be taking shape.

European Commission President Jose-Manuel Barroso said big banks must increase their capital cushions to withstand the effects of a likely default by Greece. Many hold billions in Greek debt. Barroso said they should stop paying dividends or bonuses until they meet the new standard.

The leaders of France and Germany said last weekend that they will detail a bank rescue plan by the end of October.

The euro rose to $1.3793 at 3:03 p.m. Eastern time from $1.3688 late Tuesday. It was the currency's strongest price since the end of August.

The European announcements, while lacking many details, gave traders hope that Europe can weather its debt crisis without major disruptions in financial markets. Demand for euros grew as investors poured money into European markets. Greece's Athex composite jumped 4.8 percent and Italy's FT-SE MIB soared 2.9 percent.

Traders sold dollars and yen, which are seen as relatively safe currencies. The euro rose to 106.63 yen from 104.75 yen late Tuesday.

The yen also weakened against the dollar, to 77.30 per dollar from 76.66 late Tuesday.

The dollar fell against other major currencies. It fetched 0.8944 Swiss franc, down from 0.9066 late Tuesday. The British pound rose to $1.5762 from $1.5594.

The dollar fell to 1.0147 Canadian dollar from 1.0299. The Canadian dollar tends to strengthen when hopes for the economy improve. It tracks commodities such as oil, whose prices rise when faster growth adds to demand.

Other commodity-linked currencies rose as well. The Australian dollar rose to $1.019 from 99.89 cents. The New Zealand dollar rose to 79.82 cents from 78.22 cents.




TOWNHALL MEDIA GROUP