Euro gains as market speculates on Greece

Views on a rescue emerged after news that European Central Bank President Jean-Claude Trichet is leaving a meeting of central bankers in Sydney early to attend a European Council meeting.

The European Union leaders are holding a special summit on the economy on February 11 in Brussels.

Investors cautiously waited to see what comes of the meeting as the bloc grapples with a debt crisis in Greece and budget concerns in other member sates.

"It is the system of the euro that market players are watching closely to see how it will work to solve a problem like that of Greece," said Hideaki Inoue, deputy general manager of forex trading at Mitsubishi UFJ Trust Bank.

But market activity stayed mostly subdued in Asian trade as investors were unwilling to place big bets due to concerns about sovereign credit risks in the euro zone, traders said.

"It still looks like there's strong downside power against the euro," said Akira Hoshino, chief manager in the foreign exchange trading department at Bank of Tokyo-Mitsubishi UFJ.

"But any positive news for the euro from the EU summit would give the currency a chance to rebound to some degree," he said.

The euro rose 0.4 percent from late U.S. trading on Monday to $1.3706. Last week it fell to $1.3585 on trading platform EBS, its lowest since May 2009.

The euro climbed 0.7 percent against the yen to 122.66 yen, recovering from 120.70 yen on Friday, its lowest in about a year.