* 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
NEW YORK, Oct 12 The euro rose against the
dollar and yen on Friday, but remained within its recent
trading range as investors awaited clarity on when and whether
heavily indebted Spain would formally request a bailout to shore
up its battered 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 potential bailout request is widely seen as a 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 economies.
The Spanish economy minister said on Friday a European
bond-buying plan was fully ready for use and that there was no
political resistance to a bailout request from within the euro
"The latest developments do suggest that the Spanish
authorities continue contemplating the possibility," said
Vassili Serebriakov, currency strategist at Wells Fargo in New
"While the timing remains highly uncertain, we still believe
an aid request is more likely than not," he said.
The euro was last trading at $1.2952, up 0.2 percent
on the day, but down 0.6 percent on the week. It has traded in a
relatively tight range since mid-September, roughly between
$1.28 and $1.3170.
The euro hit a 10-day low at $1.2824 on Thursday, but found
firm support at its 200-day moving average at $1.2823.
Some US$4.7 billion in euros changed hands on Friday using
Reuters Dealing, compared with US$5.7 billion on Thursday.
It recovered after the International Monetary Fund said
Europe's heavily indebted countries should be given more time to
narrow their deficits.
Data showing output at euro zone factories grew much more
than expected in August added to euro's gains.
Ian Stannard, head of European FX strategy at Morgan Stanley
in London, 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 0.3 percent to 101.55 yen
. The dollar hit a high of 78.53 yen, recovering
from Thursday's 10-day low against the Japanese currency.
It was last up 0.1 percent at 78.40 yen for the day though down
0.3 percent for the week.
News that Japan 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 Japanese yen, traders said.
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
in five years, while producer prices climbed more than expected
The Australian dollar dipped 0.3 percent to $1.0232,
retreating from the previous session's one-week high.