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Euro and Dollar gain against Yen

Monday, February 18 08:54:23

The euro and the dollar gained against the yen today after the G20 decided not to criticise Japan for its expansionary policies, but Europe's weak growth outlook and the approach of Italian elections capped the moves.

Financial leaders from the world's 20 biggest economies promised in their final statement after a weekend meeting not to devalue their currencies to boost exports, in a bid to defuse talk of currency wars among major nations.

The euro gained 0.15 percent to 125.20 yen, edging up toward a 34-month high of 127.71 yen hit earlier this month, while the dollar rose 0.5 percent to 93.99 yen, closer to its highest since May 2010 of 94.46 hit on Feb. 11.

"Future yen direction will continue to be driven by domestic monetary policy from the Bank of Japan and improving international investor confidence, which are both driving the yen weaker," said Lee Hardman, currency analyst at Bank of Tokyo-Mitsubishi UFJ.

With the G20 meeting over, the focus in European markets is switching to the release of euro area Purchasing Managers' Indexes for February and German sentiment indices due later in the week, and the upcoming general elections in Italy.

Analysts expect the euro area flash PMI indices, which point to economic activity around six months out, to show growth stabilising rather than a clear end to the current recession across the region.

The FTSEurofirst 300 index of top European shares opened down 0.1 percent at 1,159.87 points, with Germany's DAX , the UK's FTSE and France's CAC-40 flat to slightly weaker. ( C ) Reuters