June 21, 2011 / 10:38 IST
The euro inched up in choppy trading on Tuesday on hopes squabbling policymakers will come up with a solution to avoid a default by Greece, sentiment that also buoyed Asian shares.
Markets are waiting for a confidence vote on the government in the Greek parliament later in the day, a step towards the passage of more spending cuts in exchange for foreign loans.
Meanwhile, international lenders are making an unexpected visit to Athens to check on its resolve to implement painful austerity plans that have caused weeks of public protests and political confusion.
The euro last traded at USD 1.4340 , well above the three-week low of USD 1.4073 it hit last Thursday, but down from the day's high of USD 1.4385.
"In the big scheme of things, market players are starting to believe that euro zone policy makers, especially German policy makers, will try to avoid a hard landing in Greece," said Makoto Noji, senior strategist at SMBC Nikko Securities.
If the vote is passed, the Greek parliament will vote on the austerity measures on June 28. Euro zone finance ministers gave Greece two weeks from Monday to approve further spending cuts and tax rises in return for another 12 billion euros in emergency loans.
Were Greece to default on its sovereign debt, it could trigger a global financial crisis in much the same way that Lehman Brothers' collapse did in 2008, markets fear.
Credit rating agency Fitch said on Tuesday it would regard both a Greece sovereign debt swap and a rollover of maturities, even a voluntary one, as a default.
Japan's Nikkei average was up 0.6% at 9412.87, MSCI's index of Asia-Pacific stocks excluding Japan was up 0.7%, and indices in Hong Kong and South Korea also rose.
The outlook for the Nikkei was largely rangebound trading for the rest of June, an analyst said.
"At least until the central bank's tankan is out (on July 1), rises are likely to be limited to around 9,500," said Kenichi Hirano, a strategist at Tachibana Securities, referring to the Bank of Japan's quarterly survey of corporate sentiment.
"The market has priced in bad sentiment for the April-June quarter, but if the outlook for July-September is bright, the market may rise further."
Brent crude oil for delivery in August was steady at USD 111.71 a barrel. ICE Brent futures lost 1% on Monday as worries about a resolution to the Greek debt crisis made investors more risk averse, traders said.
Gold inched up to USD 1,541.29 per ounce by 0150 GMT, after closing at USD 1,540.95 on Monday. Gold, one of the chief beneficiaries of worries about the security of currencies and other assets, set a record high of USD 1,575.79 per ounce in early May.
