The European single currency breached 1.37 dollars on Tuesday on hopes that eurozone debt woes may ease, dealers said.

In morning London trade, the euro rose to 1.3727 dollars compared with 1.3648 dollars late in New York on Monday.

The dollar rose to 89.71 yen from 89.28 late Monday.

Reports that the debt and deficit problems of Greece, Spain and Portugal -- all of which belong to the 16-nation eurozone -- will be be high on the agenda at a key EU meeting on Thursday gave the euro a lift, traders said.

Meanwhile European Central Bank president Jean-Claude Trichet will leave a central bankers' meeting in Sydney early to attend the informal European Union summit in Brussels, an ECB spokesman told AFP on Tuesday.

"Speculators have gained a little bit of confidence that the Greece debt situation could take a turn this week after ECB President Trichet cut short a trip to Australia," said analyst Joshua Raymond at financial spread-betting firm City Index.

"Trichet has not always attended these meetings and so the market is taking his late change in schedule as an indicator that the ECB may be looking to work with the EU on a solution to Greece's debt problems."

The euro has been struck by worries that the debt-ridden countries Portugal, Ireland, Italy, Greece and Spain -- collectively referred to as the PIIGS by some analysts -- may be unable to restore stability to their public finances.

Last Friday the euro tumbled to 1.3586 dollars -- which was the lowest level since May 20, 2009.

Forex.com analyst Jane Foley said a "bail-out at this point would contradict the rhetoric from ECB officials to date."

The Financial Times newspaper meanwhile reported on Tuesday that traders and hedge funds have placed almost 8.0 billion dollars (5.9 billion euros) on betting that the euro could fall further because of the eurozone debt crisis.

The FT newspaper, citing figures from the Chicago Mercantile Exchange, said investors were losing confidence in the eurozone's ability to contain the unfolding crisis.

Raymond added: "The deep concern many investors have at the moment is that Greece's debt problems could spread like a virus to the other so-called PIIGS nations and this is why the longer the problems go on without a solution, the more the investors could become nervous and refrain from taking on extra risk."

In London on Tuesday, the euro was changing hands at 1.3727 dollars against 1.3648 dollars late on Monday, at 123.15 yen (121.86), 0.8812 pounds (0.8756) and 1.4670 Swiss francs (1.4648).

The dollar stood at 89.71 yen (89.28) and 1.0687 Swiss francs (1.0733).

The pound was at 1.5577 dollars (1.5579).

On the London Bullion Market, the price of gold rose to 1,068.65 dollars an ounce from 1,064 dollars an ounce late on Tuesday.