The European single currency has reached its highest level in three weeks, revived by reports that the EU is drafting a second bail-out package for Greece. Further reports that Germany is backing away from a complete restructuring of Greek debt have also helped buoy the euro to top $1.44 to the dollar.
Jean-Claude Juncker, head of the eurogroup of finance ministers, ruled out a "total restructuring" of Greek debt and said a decision on further aid to Greece would be made by the end of June.
The International Monetary Fund warned last week that it could withhold its next tranche of aid to Greece, amid opposition to further privatisations and asset sales in the country.
The warning follows the publication of the IMF's Outlook for Europe report, which predicts that the eurozone debt crisis could spread across the region unless European countries take measures to repair their failing financial systems.
For now, though, the future is looking a little brighter, with Greek financial stocks up 6 per cent and a drop of 14 basic points on 10 year Greek sovereign debt. Indeed, there has been a shift out of core euro sovereign bonds to all the peripherals, with yields on Spanish and Portuguese government debt also lower.
Such signs back the IMF's prediction of similar growth for 2011/12 as seen in the last year, although this outcome depends very much on restoring confidence in euro banks and in the single currency itself.