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The euro held a one-day gain versus the dollar before Germany’s chancellor and the International Monetary Fund’s managing director meet amid optimism Europe’s leaders are taking steps to resolve the debt crisis.

The 17-nation currency remained higher against the yen after yesterday’s advance as the leaders of Germany and France discussed a rulebook for closer fiscal union within the euro area. The Swiss franc maintained a three-day gain versus the euro on prospects traders may test the nation’s currency ceiling after central-bank Chairman Philipp Hildebrand’s resignation. The Australian and New Zealand dollars gained as Asian stocks rose, boosting demand for higher-yielding assets.

“Some positive comments from European leaders are assisting the euro, though traders are cautious, waiting to see what action plan is put in place and how bond yields react,” said Tim Waterer, a foreign-exchange dealer at CMC Markets in Sydney. “Short-term we could see the euro crawl back up to $1.2850.”

The euro was little changed at $1.2767 as of 10:22 a.m. in Tokyo from the close in New York yesterday. It traded at 98.13 yen from 98.08. The dollar was unchanged at 76.86 yen. The franc fetched 1.2113 per euro from 1.2121 yesterday. It earlier touched 1.2108, matching yesterday’s high, the strongest since Sept. 20. It was at 94.90 centimes per dollar from 94.96.

The Australian dollar advanced 0.3 percent to $1.0266 and gained 0.3 percent to 78.91 yen. New Zealand’s currency rose 0.2 percent to 78.88 and strengthened 0.2 percent to 60.62 yen

The MSCI Asia Pacific Index of shares rose 0.8 percent.

Greece Talks
German Chancellor Angela Merkel said Greece would be the focus of talks with IMF Managing Director Christine Lagarde today in Berlin. “We want Greece to stay in the euro,” Merkel said in a joint press conference with French President Nicolas Sarkozy after the two leaders met yesterday.

The heads of Europe’s two biggest economies are fleshing out a rulebook for budgetary discipline negotiated at a Dec. 9 summit that seeks to create a “fiscal compact” for the 17- member euro area. The region’s leaders may complete their new budget rulebook by Jan. 30, one month ahead of schedule.

Greek Prime Minister Lucas Papademos expects to have an outline for a 100 billion-euro ($127.7 billion) debt restructuring plan next week, when talks on the terms for a second financing deal with European Union and IMF officials start in Athens.

The euro may also advance as some traders close record bets on a decline in the currency before the European Central Bank meets Jan. 12, said David Greene, a Sydney-based senior corporate currency dealer at Western Union Business Solutions, a global payment services network.

Euro Shorts
Futures traders increased bets (.ECLRG) to a record high that the euro will decline against the dollar, data from the Commodity Futures Trading Commission released Jan. 6 showed. The difference between wagers that the shared currency would fall versus those that it would rise surged to 138,909 in the week ended Jan. 3.

The euro’s gains were limited before Spain and Italy sell securities this week amid concern the nations will struggle to meet funding needs. Spain will auction up to 5 billion euros of bonds due 2015 and 2016 on Jan. 12 and Italy will sell 12 billion euros of bills the same day.

“The first half of 2012 is going to be really difficult for the euro because there’s a significant amount of debt that’s due this quarter,” said Greene. The currency will struggle to rise beyond $1.2850 in the short-term, he said.

The common currency has declined 1.4 percent this month against nine developed-nation peers tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 0.3 percent and the yen has advanced 0.4 percent over the same period.

“You’re still going to get pretty deep budget cuts and that’s only going to deepen the recession that the euro zone is already in,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia, the nation’s largest lender. “That’s just going to encourage the ECB to cut rates even further and the U.S. economy is looking quite good by comparison, so I can see the euro trending lower.”