* Euro rises vs dollar, yen; markets await Greek aid
* Markets heartened as Greece prepares more austerity steps
* Euro to remain vulnerable, contagion risks in focus
(Adds comment, details, updates prices)
By Naomi Tajitsu
LONDON, April 30 (Reuters) - The euro rose on Friday,
extending gains against the dollar, as expectations Greece will
soon receive emergency aid helped to quieten jitters about how
Athens will pay its debts.
Investors were heartened a multi-billion-euro aid package
aimed at avoiding a Greek default may be announced in coming
days. This helped shrink the premium investors demand to hold
Greek government bonds over German paper, supporting the euro.
Earlier this week, concerns about Greece's escalating debt
crisis and worries about credit risks in other vulnerable euro
zone states pushed the euro to a one-year low versus the dollar.
Germany's finance minister said on Friday that Berlin, which
is expected to carry the brunt of the cost of helping Greece,
could wrap up a law on the assistance package in a week, ahead
of regional elections. []
Euro zone finance ministers would meet on Sunday to discuss
Greece, France said.
Analysts said a final announcement of the package was likely
to boost the euro, although the single currency would remain
fragile as investors wait to see if Greece can make painful
budget cuts to put its financial house in order.
"If the conditions of the aid are well received and the
amount offered is sufficient, the euro could rise, but any gains
will likely be short-lived," said Ulrich Leuchtmann, currency
analyst at Commerzbank in Frankfurt.
"It will depend on whether Greece is able to make good on
its promises to implement the terms."
By 1105 GMT, the euro <EUR=> had risen 0.7 percent on the
day to stand at $1.3312, off earlier highs of $1.3334.
Market participants said the euro's gains against the dollar
were prompted by a rise in the euro <EURJPY=R> of more than 1
percent to 125.90 yen, with large stops hit through 125.30.
Month-end rebalancing flows were said to favour the euro.
"The euro's being helped up on month-end fixing and there's
also some position squaring on euro shorts ahead of the long
weekend in the UK," said RBS currency strategist Paul Robson.
The euro rose further from a low of $1.3114 hit earlier in
the week, its weakest since April 2009. However, it was poised
to post a 1.5 percent fall this month, its fifth straight month
of losses, as investors remain negative on the currency.
Concerns about Greece's deficit problems have knocked the
euro down nearly 12 percent against the dollar since December.
US GDP DUE
The dollar <.DXY> fell 0.3 percent against a currency basket
to 81.747, as subsiding anxieties about Greece cooled risk
aversion and trimmed demand for the safe-haven dollar.
The dollar <JPY=> rose half a percent to 94.45 yen, with
chartists noting the break above the weekly Ichimoku Cloud at
94.28 yen ahead of Japan's Golden Week holiday next week.
They said the next resistance was the the 21-month moving
average at 94.71.
The Bank of Japan left interest rates unchanged at 0.10
percent on Friday, as widely expected. []
In contrast, the Australian dollar <AUD=D4> rose 0.4 percent
to $0.9305, its strongest in more than a week, boosted by
speculation Australian interest rates will rise next week.
Investors awaited a reading of first-quarter U.S. economic
growth due at 1230 GMT. Expectations are for 3.4 percent
annualised growth, which would suggest the U.S. economy is
recovering faster than the euro zone and Japan.
(Additional reporting by Neal Armstrong)
