TOKYO: The euro strengthened in Asian morning trade on Tuesday ahead of a European Central Bank meeting at which officials were expected to announce fresh measures to battle the eurozone debt crisis.
The common currency bought $1.2616 and 98.88 yen in Tokyo morning trade, compared with $1.2598 and 98.68 yen in London late Monday. The US market was closed Monday for the Labor Day holiday.
The dollar was at 78.37 yen against 78.32 yen in Europe.
The euro saw "sentiment turning slightly bullish" over speculation that an ECB policy meeting Thursday will usher in the restart of a bond-buying programme, said Osao Iizuka, head of forex trading at Sumitomo Mitsui Trust Bank.
The bond purchases were designed to lower public borrowing costs among crisis-hit nations such as Spain and Italy.
But bank chief Mario Draghi has been forced to defend the programme, rejecting claims it amounted to bailing out spendthrift euro members -- a charge levelled by many German politicians.
Figures showed Monday that the ECB has not bought government bonds for the past six months after it intervened from 2010 to help debt-wracked countries in the 17-nation eurozone.
However, euro optimism was tempered by new data that showed eurozone manufacturing activity contracted for a seventh month in a row in August.
China's manufacturing activity fell to its lowest level in more than three years in August as worries grow about the world's second-largest economy.
Traders were looking to US jobs data later in the week with dollar-yen trade likely to move within a narrow band until then, Iizuka said.
On Tuesday, markets would also be looking to a rate announcement from the Reserve Bank of Australia although no policy change was expected from the central bank, the analyst added.
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