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13.09.201011:21:00UTC+00Euro Rallies After Basel III Ushers In Tougher Bank Rules

The euro strengthened against other major currencies on Monday, as an accord hammered out by financial authorities further restored faith in the global banking system.

The Basel III agreement forces banks to set aside more capital to cope with the sort of meltdown that nearly toppled the entire financial system in 2008. However, the reforms will be phased in over the next eight years as a concession to concerns about bank lending during the current economic malaise.

European Central Bank President Jean-Claude Trichet assured that the new rules will "eliminate uncertainty in a large area which is a major contribution in consolidating the global economy."

Bank stocks rose around the world, and the euro rose accordingly on increased risk appetite.

Elsewhere, Greece Prime Minister George Papandreou on Sunday ruled out new austerity measures, expressing confidence of achieving the goal as planned by the end of this year.

The euro jumped to a weekly high of 1.2840 versus the dollar, moving to the upper end of a monthly trading range between 1.2600 and 1.2950.

The single currency also gained on the yen, rising to Y107.92. With the advance, the euro stayed away from an 9-year low of Y105.41 set back in August.

The euro extended its four-day win streak against the sterling, hitting 0.8335.

Economic recovery in the euro area is picking up, particularly in Germany, the European Commission said Monda. The aggregate growth figure masks uneven developments across member states, but was revised upwards to 1.7 percent from an initial prediction of 0.9 percent expansion.

The economic newsflow picks up later this week with a slew of data from the United States.

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