* Traders await clarity on Spanish bailout
* Potential for euro to rally if Madrid requests aid
* Yen capped after U.S. jobless claims data, Softbank news
By Wanfeng Zhou
NEW YORK, Oct 12 The euro rose against the
dollar and yen on Friday but remained well within its recent
range as traders awaited clarity on when and whether heavily
indebted Spain would request a bailout to shore up its finances.
Buying by sovereign investors lifted the single currency
earlier in global trade, but the euro looked likely to struggle
for traction until answers emerged over a potential Spanish aid
A bailout request is widely seen as positive for the euro as
it would remove another layer of uncertainty in financial
markets and activate the European Central Bank's bond-buying
program aimed at lowering borrowing costs for troubled euro zone
The Spanish economy minister said on Friday there was no
political resistance to a bailout request from within the euro
"There seems to be more optimism the next hurdle will be
knocked over and that hurdle is Spain," said Andrew Wilkinson,
chief economic strategist at Miller Tabak & Co. LLC.
That's "why you're seeing the dollar index lower, in
response to risk-on, and that's translating into a much stronger
euro, he said.
The euro was at $1.2969, up 0.3 percent on the day
but down 0.4 percent week-on-week. It has traded in a tight
range roughly between $1.28 and $1.3170 since mid-September.
The euro hit a 10-day low at $1.2824 on Thursday, but found
good support at its 200-day moving average at $1.2823.
It recovered after the International Monetary Fund said
Europe's heavily indebted countries should be given more time to
Ian Stannard, head of European FX strategy at Morgan
Stanley, said he expected a stronger euro in coming months given
the likely boost from a Spanish aid request.
"The euro is positioned to extend its rebound, and we expect
a move back up to September levels from 1.3170 to 1.34 for the
year-end," he said.
Against the yen, the euro rose 0.4 percent to 101.64 yen
. The dollar hit a high of 78.53 yen,
recovering from Thursday's 10-day low against the Japanese
currency of 77.92 yen. It was last up 0.1 percent at
Data showing a sharp drop in initial U.S. jobless claims
last week and news that Japanese wireless service provider
Softbank Corp may buy a majority stake in Sprint Nextel
, in a deal potentially worth at least 1 trillion yen
($12.74 billion), helped lift the dollar against the yen,
Hiroshi Maeba, head of FX trading Japan for UBS in Tokyo,
said the potential Softbank deal was so large that currency
markets could be tapped for part of the financing.
The dollar showed little reaction to U.S. data showing
consumer sentiment unexpectedly rose in October to its highest
level in five years, while producer prices climbed more than
expected in September.
The Australian dollar dipped 0.3 percent to
$1.0231, retreating from the previous session's one-week high of