Euro Rises Versus Dollar as Italy Meets Maximum Target at Bill Auction

By Anchalee Worrachate - Nov 10, 2011 5:32 PM GMT+0700

The euro rose against the dollar, trimming yesterday’s biggest drop in more than a year, after Italy raised the full amount it planned from selling one-year debt, easing concern about the nation’s ability to fund itself.

The 17-nation currency also rose against the yen, reversing an earlier decline. Italy sold 5 billion euros ($6.8 billion) of one-year bills today, with investors bidding for nearly double the amount of securities on offer. The country’s 10-year yields yesterday climbed above the 7 percent level that spurred Greece, Ireland and Portugal to seek bailouts. The ECB bought Italian bonds today before the auction, according to three people familiar with the transactions.

“The whole market is watching the Italian bill auction today, and we expect a choppy trade,” Sebastien Galy, a senior currency strategist at Societe Generale SA in London, said before the auction. “Somehow they will find a way to make it work as they know how crucial this is to market sentiment.”

Europe’s shared currency climbed 0.4 percent to $1.3597 at 10:27 a.m. London time, after reaching $1.3484, its weakest since Oct. 10. It rose 0.2 percent to 105.60 yen after earlier sliding to 104.83, the least since Oct. 26. The yen strengthened 0.2 percent to 77.68 per dollar.

The euro fell 2.1 percent against the dollar yesterday, the biggest decline since Aug. 11, 2010.

The bills were sold to yield 6.087 percent today, compared with 3.57 percent the last time it sold 12-month bills on Oct. 11.

To contact the reporters on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net;

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net