* Euro edges up 0.3 pct versus dollar <EUR=> to $1.2675
* Analysts say debt contagion risks stemmed for now
* Strong Australian jobs data buoys Aussie
(Adds quotes, updates prices, previous TOKYO)
By Neal Armstrong
LONDON, May 13 (Reuters) - The euro edged up on Thursday,
aided by an improvement in risk appetite which boosted
higher-yielding currencies and as contagion risks from euro zone
debt problems diminished.
A $1 trillion rescue deal hammered out at the weekend by
global policymakers has eased investor worries a Greek sovereign
debt crisis will spread.
However, concerns about the ability of fiscally weaker
states to make necessary budget cuts and about the impact on
growth continue to weigh on the euro.
Passage of the rescue deal has boosted risk appetite this
week and data on Thursday showing Australian unemployment surged
in April added to this. []
Asian equity markets rose, with the Nikkei <> holding
gains of around 2 percent, following on from robust performances
in U.S. stocks on Wednesday.<.SPX>
"For now the contagion risks in the euro zone have been
partly stemmed which has helped the riskier currencies and
provided a floor for the euro," said Jeremy Stretch, currency
analyst at Rabobank.
"But there are question marks over the austerity measures
required in the southern European states and that makes the euro
vulnerable," he said.
At 0728 GMT, the euro was trading with gains of around 0.3
percent on the day versus the dollar <EUR=> at $1.2675, but
remained in sight of its recent 14-month low near $1.25. Traders
reported strong option-related demand around $1.25.
The euro rallied 0.7 percent versus the yen <EURJPY=R> to
118.60 yen, having fallen to an eight-year low of 110.49 yen on
trading platform EBS last week.
In the week to May 8, Japanese investors dumped a net 1.57
trillion ($16.8 billion) yen of overseas bonds, the heaviest net
selling since 2.11 trillion from the week to April 4 last year,
data from Japan's finance ministry showed. []
Traders said this illustrated the growing risk aversion
which fuelled a rout in global stocks last week.
The dollar was up around 0.4 percent against the yen <JPY=>
at 93.55 yen.
The Australian dollar rallied close to 1 percent on the day
to trade back above $0.90 versus the U.S. dollar <AUD=D4>.
But analysts said interest rate rises from the Reserve Bank
of Australia may be limited by external factors, potentially
capping further Aussie gains.
"Despite the RBA's increasing concerns over the inflation
outlook and a tightening in the labour market, we think global
factors dominate and expect the RBA to stay on the sidelines for
the next couple of months," said Su-Lin Ong, senior economist at
RBC Capital.
Sterling climbed 0.6 percent versus the dollar <GBP=D4> to
$1.4912, trimming losses made the previous day when a dovish
inflation outlook from the Bank of England knocked the currency
down around 0.7 percent.
(Additional reporting by Kaori Kaneko, Editing by Nigel
Stephenson)
