Euro bounces back on news of bigger bailout fund

AP News
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Posted: Oct 24, 2011 4:03 PM
Euro bounces back on news of bigger bailout fund

The dollar fell against the euro Monday on news that Europe's financial rescue fund will be expanded to $1.39 trillion.

The expansion is the latest attempt by European leaders to head off a messy default by Greece, prop up struggling European banks and prevent the region's debt crisis from spreading to larger nations like Italy and Spain. The changes to the bailout fund and other measures are expected to be finalized at a summit meeting Wednesday.

The euro rose to $1.3951 at 3:10 p.m. Eastern time from $1.3864 late Friday. The euro also rose against the Japanese yen and British pound.

The euro has risen steadily against the dollar this month as debt talks among European leaders appeared to move more quickly. The currency was recovering from a slide that pushed it down 9.4 percent between Aug. 29 and Oct. 4, when it hit a recent low of $1.3172.

That was the day after U.S. stocks closed at the lowest level of the year. The slide in stocks encouraged traders to pile into dollars and other assets seen as being relatively safe.

Progress toward solving Europe's debt crisis could avert or blunt a recession there. Traders would need euros to invest in rising European markets.

In other trading, the pound rose to $1.6002 from $1.5939 late Friday.

The dollar fell to 0.8799 Swiss franc from 0.8846. It fell to 1.0043 Canadian dollar from 1.0093. It fell to 76.05 yen from 76.12.

The dollar fell late Friday to a post-World War II low against the yen, according to a note from UBS Investment Research. It remains near that level.