The euro rose versus all of its major counterparts on speculation European Union leaders will step up efforts to contain the region’s debt crisis and as demand rose at Spain’s debt sale.

The 17-nation currency had its biggest four-day gain versus the dollar since March 2009 as European Central Bank President Jean-Claude Trichet signaled an increased risk of inflation. The dollar dropped versus the yen as a government report showed U.S. jobless claims have risen.

“You’ve seen a fairly strong commitment and expectations of further initiatives by the Union to stabilize the economy and do what’s needed,” said Fabian Eliasson, head of U.S. currency sales at Mizuho Financial Group Inc. in New York. “That puts a calming effect on the situation.”

The euro gained 1.8 percent to $1.3365 at 1:32 p.m. in New York, from $1.3131 yesterday. Its four-day again of 3.6 percent is the biggest on a closing basis since March 23, 2009. The euro advanced 1.5 percent to 110.63 yen, from 109, after touching 110.68, the highest level since Dec. 20. The dollar fell 0.2 percent to 82.84 yen, from 83.

Goldman Sachs Group Inc. recommended purchasing the euro against the dollar at $1.3180, with an initial target of $1.37 and a one-day stop on a close below $1.2850. The recommendation was made in a research note today.

IntercontinentalExchange Inc.’s Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, slid as much as 1.3 percent to 78.994, the lowest level since Jan. 4.

Jobless Claims

U.S. applications for jobless insurance payments rose by 35,000 to 445,000 in the week ended Jan. 8, according to Labor Department data. The figures are volatile this time of year because it’s difficult for the government to adjust the numbers for seasonal changes.

Economists prefer to focus on the average number of applications over the past four weeks, which increased to 416,500 after reaching a two-year low.

“The claims only reminded traders of the difficult road ahead,” said Kathy Lien, director of currency research at the online currency trader GFT Forex in New York.

The Swiss franc slid as much as 1.5 percent to 1.2885 versus the euro, the weakest level since Dec. 14, on reduced demand for the safety of the Alpine nation’s assets. The franc pared its rally versus the euro this year to 2.7 percent, dropping earlier today after Swiss National Bank Vice President Thomas Jordan said yesterday that the currency’s strength poses a threat to economic growth.

Euro Versus Dollar

The euro has advanced from a four-month low of $1.2867 reached on Jan. 10 on speculation European finance ministers meeting next week may increase the size of aid reserves and lower rates on bailout loans. German Chancellor Angela Merkel expressed yesterday her willingness to take whatever steps are necessary to stem the debt crisis.

Spain sold 3 billion euros ($3.9 billion) of five-year bonds in its first debt auction of the year, meeting its maximum target. Demand was 2.1 times the amount sold, compared with 1.6 times at the previous sale. Italy sold 6 billion euros of bonds due in 2015 and 2026.

Trichet signaled he’s prepared to raise interest rates if needed to fight inflation even as leaders struggle to contain the region’s sovereign debt crisis.

“If inflation remains elevated in the months ahead, the bank might be compelled to boost interest rates,” said Joe Manimbo, a market analyst in Washington at Travelex Global Business Payments, a currency-exchange network. “That would make the euro more attractive to investors.”

Europe’s Target Rate

The ECB’s Governing Council still set the benchmark rate at 1 percent for the 21st month, as predicted by all 53 economists in a Bloomberg News survey.

Euribor futures contracts slumped, sending yields higher. as investors added to bets borrowing costs will rise. The implied yield on the contract for December 2011 advanced 13 basis points to 1.64 percent.

The pound advanced for a fifth day, rising 0.6 percent to $1.5885 after the Bank of England kept its main interest rate and emergency stimulus program unchanged.

The Monetary Policy Committee held the bond-purchase program at 200 billion pounds ($317 billion), as predicted by all 39 economists in a Bloomberg News survey. The central bank left its main rate at an all-time low of 0.5 percent.

Chilean Peso

Foreign investors cut bets on the Chilean peso beating the dollar by $2.3 billion in the week after the central bank disclosed plans to buy $12 billion this year to boost reserves by 40 percent and slow the peso’s gains.

The net position of foreign traders in the Chilean peso forwards market was a $600 million short on Jan. 10, compared with a $1.7 billion long position before the central bank’s Jan. 3 announcement, according to central bank data published today. A short is a bet an asset may decline.

The peso declined 6 percent in the seven days through Jan. 10, more than any other currency in the world tracked by Bloomberg over the same period. It appreciated 0.1 percent today to 490.05 per dollar, from 490.65.