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* Euro treads water before ECB policy meeting
* Dollar index eases from 14-month high
* Dollar/yen edges towards 6-year high
* Russian rouble rebounds from record low vs dollar
By Richard Leong
NEW YORK, Sept 3 (Reuters) - The euro stabilized against most major currencies on Wednesday on speculation of a possible ceasefire in eastern Ukraine, offering some comfort to the euro zone economy which has borne the brunt of the impact of the conflict.
The common currency rose from its one-year low versus the dollar after Ukraine’s President Petro Poroshenko said an agreement was reached with his Russian counterpart Vladimir Putin for a “permanent ceasefire” in eastern Ukraine’s Donbass region.
However, the Kremlin said Putin and Poroshenko had agreed on steps towards peace in eastern Ukraine, but a ceasefire had not been agreed between Moscow and Kiev because Russia is not a party to the conflict.
The mixed messages caused some confusion, but most investors were relieved by signs both countries were moving towards peace.
“The headlines are offering some comfort to the euro,” said Ian Gunner, portfolio manager at Altana Hard Currency Fund in London.
The euro last traded on the EBS platform up 0.1 percent at $1.3149, recovering from a one-year low of $1.3110 struck on Tuesday. It edged up 0.02 percent at 138.03 yen after touching an eight-week high earlier at 138.28 yen.
The dollar weakened against the Russian rouble on the ceasefire talk. The greenback fell 1.8 percent to 36.7415 roubles after hitting a record high of 37.515 roubles on Monday.
The conflict in Ukraine and related sanctions imposed by western countries on Russia have taken its toll on the euro zone which analysts reckon will need more stimulus from the European Central Bank.
While the ECB is unlikely to take action on Thursday, the threat of falling prices, along with uncertainty to the recovery from the Russia/Ukraine conflict, is likely to see President Mario Draghi flag the prospects of more easing in coming months.
“Conditions in the euro zone continue to weaken. It’s a matter of time (before) the ECB has to act aggressively,” said Sireen Harajli, currency strategist at Mizuho Corporate Bank in New York.
The euro’s recovery saw the dollar index edge down 0.15 percent to 82.87, which was not far below a 14-month high of 83.058 set earlier. The dollar has made an impressive start in August on strong domestic economic data and a rise in U.S. yields.
The yen was supported by expectations that the Bank of Japan, which began a two-day policy meeting, may sit tight and reiterate its view that the economy is recovering moderately.
Against the yen, the dollar dipped 0.07 percent at 104.99 yen, below an eight-month high of 105.28 yen. A break above 105.45 yen would take the greenback to a high not seen since October 2008.
Apart from upbeat U.S. data which is likely to buoy the dollar, the yen is likely to stay under pressure on bets that Japan’s behemoth Government Pension Investment Fund (GPIF) would decide in the coming weeks to put more money into riskier assets including stocks and foreign bonds, which could increase demand for foreign currencies. (Additional reporting by Anirban Nag in London; Editing by Toby Chopra and Bernadette Baum)