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Euro gains in Asia on German data

The euro strengthened in Asia on Wednesday, boosted by a surge in a closely watched German confidence index as markets look ahead to elections in debt-hit Italy.

The common European currency bought 125.33 yen and $1.3411 compared with 125.24 yen and $1.3390 in New York on Tuesday.

The dollar slipped to 93.39 yen from 93.54 yen, as data showed Japan had logged its worst-ever monthly trade deficit in January, although exports climbed for the first time in eight months.

The German investor confidence index calculated by the ZEW economic institute soared to 48.2 points in February from 31.5 points in January, according to figures released Tuesday, its highest level since April 2010.

The reading beat market expectations for a more modest increase to 35, stoking hopes that the eurozone could edge towards economic recovery this year.

"Of increasing influence on the euro over the balance of the week is likely to be growing concern about the weekend/Monday Italian elections which carry some significant downside risk," National Australia Bank said in a note.

Opinion polls have shown former prime minister Silvio Berlusconi, who is running in his sixth election campaign, narrowing the gap ahead of the February 24-25 vote.

Outgoing Prime Minister Mario Monti has warned that the European Union fears Berlusconi's return because it is worried about a reprise of the days of lax financial discipline that could harm the eurozone.

The dollar was mostly down against other Asia-Pacific currencies, hitting Tw$29.55 from Tw$29.57 Tuesday, falling to 9,693 Indonesian rupiah from 9,707 rupiah, to Sg$1.2364 from Sg$1.2380, and to 54.03 Indian rupees from 54.20 rupees.

The greenback also dropped to 1,077.44 South Korean won from 1,080.55 won, and to 29.84 Thai baht from 29.88 baht, while staying flat at 40.62 Philippine pesos.

The Australian dollar firmed to $1.0359 from $1.0327 while the Chinese yuan eased to 14.93 from 14.98 yen yen.