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Euro picks up on Greek bailout plan

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The euro gathered steam on Friday as Greece submitted a fresh bailout plan ahead of a key European Union meeting that could decide its future in the eurozone, while concerns over China's stock plunge also eased.

[TOKYO] The euro gathered steam on Friday as Greece submitted a fresh bailout plan ahead of a key European Union meeting that could decide its future in the eurozone, while concerns over China's stock plunge also eased.

In Tokyo, the single currency bought US$1.1085 and 135.15 yen, compared with US$1.1035 and 133.88 yen in New York on late Thursday The dollar rose to 121.91 yen from 121.34 yen in US trade.

Greece on late Thursday laid out details of a new bailout plan to save it from financial collapse, offering a pensions overhaul and tax hikes in return for debt relief and a rescue loan from the eurozone.

The package, handed in just two hours before a crucial deadline of midnight (2200 GMT), closely resembled an offer put forward by Greece's international creditors before talks broke down last month.

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But there was no immediate word on whether it would be enough to unlock fresh aid.

"Greece looks to have handed in its homework at least a couple of hours early. Whether it needs to score 10/10, or 8/10 to be followed by more to-ing and fro-ing on Friday morning, remains to be seen," Ray Attrill, global co-head of forex strategy at National Australia Bank, said in a commentary Eurozone officials will now study the details of the plan before a full European Union summit on Sunday that could determine whether Greece remains in the currency club.

The summit comes a week after Greeks overwhelmingly voted to reject a fresh bailout package offered by creditors - the European Commission, the European Central Bank and the International Monetary Fund - in return for new tax rises and spending cuts.

"The Greek proposal gives the impression that the government is compromising," Yuji Saito, executive director of foreign exchange at Credit Agricole in Tokyo, told Bloomberg News.

"Euro-yen is rising as investors unwind yen buying positions that accompanied risk aversion." Investors tend to buy the yen during times of uncertainty or turmoil.

Sentiment also picked up as China's main Shanghai stock index jumped more than five percent in morning trade, on the back of government moves to boost the market after a month-long sell-off.

Chinese stock markets had plunged more than 30 per cent after a spectacular bull run peaked last month, raising fears for the world's second-biggest economy.

AFP

Read more on the Greek crisis here

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