Tuesday, 18 December 2012 17:54
LONDON: The euro traded near a 7-1/2 month high against the dollar on Tuesday on signs of progress in talks to avert the US "fiscal cliff" and on improving investor demand for euro zone assets.
Optimism that US policymakers can reach a deal to avert a combination of tax hikes and spending cuts that risk tipping the world's largest economy into recession prompted market players to sell the highly liquid dollar, which is seen as a safe haven.
The improvement in market sentiment lifted the euro and also boosted demand for European shares while pushing Spanish and Italian bond yields lower.
Some strategists said year-end investment flows could help the euro extend its gains to test the late March high just below $1.34, although concerns about the euro zone's weak growth outlook may leave it vulnerable to selling in the new year.
The euro was last up 0.15 percent on the day at $1.3178, ...