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Euro makes big gains against US dollar, yen in Asian trade

TOKYO--The euro surged in Asian trade on Friday after European leaders struck a deal on a US$150 billion growth pact to shore up the eurozone, and opened the door to wider use of rescue funds.

The single currency was changing hands at US$1.2596, climbing from US$1.2449 in morning Tokyo trade, while it also rose against the Japanese currency to 100.19 yen from 98.60 earlier Friday.

The dollar, meanwhile, rose slightly in Asian trade to 79.49 yen from 79.21 earlier Friday. It was quoted at 79.45 in New York on Thursday.

Traders were caught off guard by concrete news out of European Union talks in Brussels, which had widely been expected to yield few substantial measures to tame the eurozone's fiscal woes.

“Since there were low expectations from the EU summit, this news has come as a surprise,” Masafumi Yamamoto, chief forex strategist at Barclays Capital in Tokyo, told Dow Jones Newswires.

The euro spiked as EU president Herman Van Rompuy said the 17-nation eurozone would make a more “flexible” use of the rescue funds “to reassure markets and to get again some stability around the sovereign bonds of our member states.”

“It was extremely important that we agreed not on the report itself but on a clear vision about what has to be done,” Van Rompuy said. “The aim is of course to make the euro an irreversible project.”

Facing soaring interest rates, Italy and Spain had blocked an EU growth pact until their partners yielded to their demands to use the rescue funds to buy bonds in the markets, a stalemate that hurt the euro in morning Asian trade.

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