Tokyo - The euro firmed against the dollar in Asian trade on Monday, recouping its earlier losses that reflected worries over Middle Eastern oil supplies sparked by ongoing turmoil in Libya, dealers said.
The euro rose to $1.3760 in Tokyo afternoon trade from $1.3749 in New York late on Friday after falling as low as $1.3709 in the morning. The European unit was higher at ¥112.31 compared to ¥112.25.
The dollar fetched ¥81.60, slightly down from ¥81.68.
Tokyo stocks' rebound in the afternoon prompted investors to buy the risk-sensitive euro against the yen, dealers said. The benchmark Nikkei average was up 0.92% at 10 624.09.
Behind the euro's recent firmness were expectations that the European Central Bank would soon move to raise rates, dealers said. The ECB is scheduled to hold its policy meeting on Thursday.
"Following a series of comments (from ECB board members) laying the groundwork for a rate hike, everyone is closely watching if there would be any change in the tone of the ECB's upcoming statement," said Nobuaki Tani, dealer at Resona Bank.
High oil prices put pressure on the euro in earlier trade. Crude rose again - despite the Opec oil cartel and Saudi Arabia saying they would be able to meet any shortfall - as the Arab world continued to be rocked by protests.
Libya's Moamer Kadhafi was under further pressure as he lost control of several towns while world leaders condemned his heavy-handed crackdown that has seen hundreds killed and the United Nations impose travel bans on his regime.
"The market is focusing on the situation in the Middle East and North Africa, as well as oil prices," Tani said.
Referring to the earlier euro selling, Gen Kawabe, dealer at Chuo Mitsui Trust and Banking, said: "The euro faced some adjustments after being bought too much on rate hike expectations, while the outcome of the Irish general election weighed on the currency."
The landslide victory of the largest opposition party at the Irish general election on Sunday raised uncertainty that the new government may seek to alter the terms of a bailout from the European Union and International Monetary Fund, dealers said.
Prime minister in waiting Enda Kenny of the Fine Gael party has promised to move quickly to seek an amendment of the unpopular EU and IMF bailout for the debt-ridden eurozone member.
The dollar was broadly lower against other Asian currencies.
It fell to Sg$1.2726 from 1.2755 on Friday, to Tw$29.75 from 29.80, and to 8 812.50 Indonesian rupiah from 8 852.50. The unit also sagged to 43.71 Philippine pesos from 43.82 and to 30.60 Thai baht from 30.63.