Euro climbs in London

The euro climbed against the dollar on Thursday after a successful Spanish bond auction eased some of the concern over the debt problems plaguing the eurozone's most-indebted countries. The single currency also hit a one-month high against the Swiss franc as investors pared bearish bets on speculation that measures to tame the eurozone debt crisis may be on their way.
Traders said jitters before an upcoming emergency meeting of Swiss unions and industry representatives triggered selling in the Swiss franc against the euro, pushing the euro to 1.2837 francs, its highest since mid-December. Investors had gone long on the Swiss franc and sold the euro in December, driving the franc to a record high. Traders said some of those long positions on the Swiss franc were being cut.
German Finance Minister Wolfgang Schaeuble said on Wednesday that euro zone countries are working on a "comprehensive package", which may be agreed by February or March, to solve the bloc's debt crisis. Strong demand at the Spanish auction, which came on the heels of a solid sale of Portuguese debt on Wednesday, also bolstered the euro, but some analysts said gains may be limited. "Both the Portuguese and the Spanish auctions were concerns at the beginning of the week and both seem to have gone off reasonably well," said Raghav Subbarao, currency strategist at Barclays Capital.
"But in the medium term there are still concerns about the policy and political perspective regarding how their debt situations will be resolved, and I don't think anything has changed because of these auctions." The euro was up 0.4 percent on the day at $1.3187, helped by steady buying by Asian central banks and well above the day's low to $1.3089. This was the second straight day the euro was on track for gains, recovering from a fall to around $1.2860 on Monday, its weakest since mid-September.
It retained those gains after the European Central Bank kept rates unchanged. President Jean-Claude Trichet will speak to reporters at 1330 GMT and markets will focus on the central bank's bond-buying programme and its reaction to higher inflation.
Analysts said the euro may see some support on speculation that a concrete solution to the debt crisis may come soon. Top European Union officials are pushing for the bloc to increase the size and scope of the 440 billion euro ($574 billion) rescue fund it agreed to put in place after bailing out Greece in May.
Still, others argue the euro remains vulnerable to selling if debt problems resurface. Support for the euro kept the dollar weak. The dollar index, which tracks the greenback's performance against a basket of major currencies, was down 0.2 percent at 79.88. The dollar moved sideways against the yen at 82.98 yen, holding within the previous session's trading range.
The Bank of England kept rates at a record low of 0.5 percent but rising inflationary pressures and higher UK yields have prompted money markets to price in a strong chance of a rate hike as early as May. As a result, sterling hit a one-month high of $1.5793 versus the dollar.