Oct. 21 (Bloomberg) -- The Swiss franc strengthened as investors sought refuge amid concern European policy makers may struggle to come up with a comprehensive plan to resolve the region’s debt crisis.
The euro pared a 0.6 percent decline versus the dollar and the yen after euro-area leaders scheduled an additional summit for Oct. 26, on top of the one set for Oct. 23, because Germany and France said they need more time to seal an accord. The franc reached a two-week high versus the euro, while Norway’s krone and Sweden’s krona rose as investors bought the safest European currencies. The yen and the dollar headed for advances this week against most of their major counterparts.
“The market feels comfortable that there’s still some upside room in the Swiss franc,” said Marc Ostwald, a strategist at Monument Securities Ltd. in London. “It’s not a huge amount of room but for some people it’s better than the euro. I think it will be another choppy day as what is likely to come out of the weekend’s meetings is the focus for markets.”
The franc rose 0.4 percent to 1.2267 per euro at 7:03 a.m. New York time after reaching 1.2208, the strongest since Oct. 4. The currency climbed 0.2 percent to 89.18 centimes per dollar. The euro was 0.2 percent weaker at $1.3752, heading for a 0.9 percent loss this week. The 17-nation currency fell 0.2 percent to 105.54 yen. The Japanese currency was little changed at 76.73 per dollar.
Almost two years after Greece was first bailed out by euro- area nations, governments are still struggling to find a lasting solution to a crisis that has since engulfed Ireland and Portugal and is now threatening Italy and Spain.
Negotiations on combining the European Union’s temporary and planned permanent rescue funds in mid-2012, while scrapping a ceiling on bailout spending, accelerated this week after efforts to leverage the temporary fund ran into European Central Bank opposition and provoked the French-German clash, two people familiar with the discussions said. They declined to be identified because political leaders will have to decide.
Norway’s krone appreciated against all but two of 16 major peers tracked by Bloomberg, gaining 0.3 percent against the euro to 7.7061. Sweden’s krona also gained 0.3 percent, to 9.0949 to 17-nation currency.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the U.S. currency against those of six U.S. trading partners, was little changed at 76.992. The gauge has risen 0.5 percent this week.
Yen Safety Bid
The yen extended its weekly advance versus the euro to 1.6 percent. Demand for safety has seen Japan’s currency gain 7.8 percent versus a basket of nine of its developed-market peers over the past three months, according to Bloomberg Correlation- Weighted Indexes. The dollar has risen 5.3 percent.
The VIX, as the Chicago Board Options Exchange Volatility Index is known, has risen 23 percent since Oct. 14, set for the biggest weekly gain in a month. The index measures the cost of using put and call options to protect against changes in the Standard & Poor’s 500 Index.
“The yen’s strength is reflecting risk concern, as the correlation between the currency and the VIX has tightened up somewhat in recent sessions,” said Sacha Tihanyi, a Hong Kong- based currency strategist at Scotia Capital, the investment banking unit of Bank of Nova Scotia.
--With assistance from Masaki Kondo in Tokyo. Editors: Mark McCord, Nicholas Reynolds
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