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12/17/10

Euro Gains as EU Reaches Accord, German Business Sentiment Rises

The euro rose against the dollar for a second day after European Union leaders agreed to create a mechanism to contain future debt shocks and German business confidence unexpectedly climbed.

The euro gained versus 15 of its 16 most-traded counterparts even as Moody’s Investors Service cut Ireland’s credit rating. The yen headed for a weekly loss against most of its major peers as Asian stocks advanced. The Swiss franc traded at a record versus the common currency.

The EU summit result “sets the stage for further consolidation, such as cross-border guarantees” between member states’ debt, said Geoffrey Yu, a foreign-exchange strategist at UBS AG in London. The agreement “is not negative for the euro. If they had downgraded Ireland to junk right now I don’t think it would make too much of a difference, because the country is already shut out of markets anyway.”

For more: Euro Gains as EU Reaches Accord, German Business Sentiment Rises - BusinessWeek

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