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 The euro rose nearly 1 percent against the dollar, which earlier
hit a 12 1/2-year high against the yen, but traders said this was
related to an above-forecast rise in euro zone inflation rather than
to the Greek drama.
U.S. stocks looked set to open lower, according to index futures.
The leaders of Germany and France and Greece's international
creditors agreed late on Monday to work with "real intensity" as
they try to reach a deal that would prevent Athens from defaulting
and potentially leaving the euro zone.
Greek Prime Minister Tsipras said Athens had sent creditors a
"comprehensive" and "realistic" package of reforms and urged
Europe's leaders to accept it.
"The fact that five such political and financial heavyweights met
about Greece means they are trying to force a break in the political
deadlock and that's a positive development that's likely to lift
risk sentiment. But we will have to wait to see the Greek reaction,"
said KBC strategist Mathias van der Jeugt.
Athens is due to make a 300 million euro debt repayment to the
International Monetary Fund on Friday.
The pan-European FTSEurofirst 300 stock index fell 0.5 percent.
Germany's DAX was down 0.6 percent, as was the main Athens stock
index.
"The real money is still sitting on the sidelines because God knows
what's going to happen to Greece," said Justin Haque, a trader at
brokerage Hobart.
Yields on safe-haven German 10-year bonds rose 8.5 basis points to
0.6 percent, while those on lower-rated Spanish, Italian and
Portuguese debt touched their highest of the year after the data
showing inflation resumed in the euro zone last month.
Prices rose 0.3 percent, beating forecasts of a 0.2 percent
increase.
Earlier, Asian shares fell for a second day as a strong dollar
weighed on commodity prices.
MSCI's main index of Asia-Pacific shares, excluding Japan, fell 1.1
percent and Tokyo's Nikkei closed down 0.1 percent.
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China's CSI300 index of the biggest listed companies in Shanghai and
Shenzhen rose 1.7 percent. After rising almost 5 percent on Monday,
Chinese indexes have regained nearly all the ground lost in a
sell-off last Thursday.
The euro was up 0.9 percent at $1.1022.
"A spike higher in the euro near the 50-day moving average, helped
by the better Euro-area consumer price inflation, is putting
pressure on the dollar," said Keng Goh, a strategist with RBC
Capital Markets in London.
Earlier, the dollar rose to more than 125 yen for the first time
since 2002, peaking at 125.07, before retreating. It last stood at
124.74 yen, flat on the day.
AUSSIE
The Australian dollar was up 1 percent at $0.7680 after the Reserve
Bank of Australia kept interest rates steady and did not offer a
clear bias to ease policy again.
Oil prices rose as strong demand outweighed expectations that the
Organization of the Petroleum Exporting Countries (OPEC) would not
cut production when it meets in Vienna on Friday. Brent crude was up
41 cents at $65.29 a barrel.
Gold held steady at $1,190.46 an ounce, down from Monday's peak
above $1,200.
(Additional reporting by Emelia Sithole-Matarise, Francesco Canepa
and Jamie McGeever in London, Lisa Twaronite in Tokyo; editing by
John Stonestreet and Gareth Jones)
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