Oct. 31 (Bloomberg) -- The euro rose for a second day versus the yen as European governments pressed Greece to make deeper spending cuts to keep aid flowing as they pushed to resolve the region’s three-year-old sovereign-debt crisis.
The 17-nation currency earlier erased a gain against the dollar as a decline by U.S. stocks, trading for the first time in three days due Hurricane Sandy, damped the appeal of riskier assets. The euro strengthened earlier against most of its 16 major peers before Portuguese lawmakers hold an initial vote tomorrow on the 2013 budget proposal. Norway’s krone rose as the central bank kept its benchmark interest rate on hold and said it won’t buy foreign currency.
“Risk came off,” Brian Kim, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities Inc. in Stamford, Connecticut, said in telephone interview. Leaders discussing Greece’s bailout “gave some support overnight. Those developments aren’t that surprising, given comments from Europe officials over recent weeks.”
The shared currency gained 0.2 percent to 103.38 yen at 5 p.m. New York time after climbing to 104.59 on Oct. 23, the strongest since May 4. The euro was little changed at $1.2960 after appreciating as much as 0.5 percent. The yen weakened 0.2 percent to 79.77 per dollar.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, rose less than 0.1 percent to 79.938.
The Standard & Poor’s 500 Index finished little changed after rising as much as 0.5 percent.
Norway’s krone rose against all its major counterparts after Norges Bank left its overnight deposit rate at 1.5 percent, the Oslo-based bank said today. The decision was forecast by all 14 economists surveyed by Bloomberg. The central bank earlier said it wouldn’t purchase foreign currency for its sovereign-oil fund in November.
“One of the biggest headwinds against near-term krone strength has been averted,” Erica Blomgren, chief strategist at SEB AB in Oslo, wrote in reply to e-mailed questions.
The krone appreciated 0.5 percent to 5.7021 per dollar after rising as much as 1 percent. The currency advanced 0.5 percent to 7.3903 per euro.
The pound strengthened for a second day against the dollar amid speculation the Bank of England will refrain from adding monetary stimulus to the economy when it meets next week.
The central bank will announce on Nov. 8 whether to increase its target for asset purchases, or quantitative easing, from 375 billion pounds ($604 billion) after data last week showed gross domestic product expanded 1 percent last quarter as the economy emerged from a recession.
Sterling rose 0.4 percent to $1.6129 and gained 0.4 percent to 80.35 pence per euro.
With Greece pleading for a 31 billion-euro ($40 billion) aid payout in November and facing a sixth year of recession in 2013, euro finance ministers said unfreezing loans for the country required more efforts in Athens to rein in the budget deficit and deregulate the economy.
“We called on the Greek authorities to solve remaining issues so as to swiftly finalize the negotiations,” Luxembourg Prime Minister Jean-Claude Juncker said in an e-mailed statement today after leading a two-and-a-half-hour conference call with the finance chiefs. He said the aim is “to conclude on the program” at a scheduled Nov. 12 meeting of the ministers in Brussels.
Leaders discussing Greece’s bailout and “showing a little bit of a flexibility without giving up the ultimate goal is definitely a positive development” for the euro, said Sireen Harajli, a foreign-exchange strategist in New York at Credit Agricole SA.
The Portuguese parliament is due to hold a final budget vote on Nov. 27. The coalition government is backed by the Social Democrats and the conservative CDS party, which together have a majority of seats in the legislature. The Greek government will also present its budget to parliament today, though no date has been set for a vote.
The Dollar Index dropped earlier as Hurricane Sandy was forecast to cut output in the world’s largest economy by as much as $25 billion in the fourth quarter, according to Gregory Daco, a U.S. economist at IHS Global Insight. He said that could reduce the fourth-quarter pace of growth to between 1 percent and 1.5 percent, from the firm’s earlier estimate of 1.6 percent.
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota said yesterday in Duluth, Minnesota, that he “strongly” disagreed with the view that the Fed’s policy has been too accommodative.
The Federal Open Market Committee voted last week to continue buying $40 billion in mortgage bonds each month, aiming to reduce unemployment. The Minneapolis Fed chief has been calling for additional stimulus through a more explicit pledge to keep interest rates near zero.
The euro has strengthened 0.9 percent this month, the second-best performance after the Swiss franc among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen fell 2.3 percent, and the dollar rose 0.2 percent.
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