The euro rose against the dollar, rebounding from its biggest two-day drop since 2008, on speculation the region's debt crisis won't keep the European Central Bank from increasing interest rates.

The common currency gained after European Union officials agreed in an unannounced meeting on May 6 to reconsider the terms of the 110 billion-euro ($158 billion) lifeline Greece received last year. The yen weakened versus most major peers and the dollar index slipped as commodities rallied. The pound depreciated after the Confederation of British Industry lowered its economic growth predictions and a report showed house prices unexpectedly fell.

"That we still have a Fed policy that implies low interest rates for quite a prolonged period of time means that the rate differential still works in favor of the euro," said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt. "As long as people believe that the ECB can continue its interest-rate policy despite the euro-zone debt crisis, this will be an ongoing trend with spikes to the downside again and again as we see bad news like that on Friday."

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