LONDON: European shares and the euro got a boost on Wednesday on talk the IMF may do more to help resolve the European debt crisis but worries over the outcome of crucial Greek debt restructuring negotiations limited any gains.
Media reports indicating that the IMF is proposing to boost its lending resources by $1 trillion reversed gains in safe-haven German government bond prices as the news encouraged buying of riskier assets.
But the focus is on a meeting between international creditors and the Greek government later on Wednesday to resume talks that broke down last week over the interest rate Greece will offer on new bonds and a plan to enforce private investor losses.
A deal with the private sector is vital to cash-strapped Athens if it is to gain its next batch of international aid and avoid going bankrupt when 14.5 billion euros ($18.5 billion) of bond redemptions fall due in late March.
"Greek bond negotiations could trigger more euro weakness as they have to close a deal soon, before Greek debt repayments are due in March," Richard Falkenhall, currency strategist at SEB in Stockholm said.
The euro traded up to session highs of $1.2845 on the IMF reports and away from the $1.2624 low hit on Friday, its weakest rate since last August.
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