The euro rallied against most major currencies on Friday after European banks said they would pay back a bigger than expected 137bn euros in loans, the latest sign of financial recovery in the Eurozone region.

The single currency gained 0.6% to $1.3453, after hitting a high of $1.3479 earlier in the session, a level not seen since last February. Over the week, the euro was up over 1% against the dollar.

The European Central Bank said 278 banks would repay €137.2bn of the December LTRO on January 30th, the earliest date for repayments.

The euro also firmed to ¥122.36 from ¥120.90 previously.

Market sentiment was also boosted by a survey showing improved German business confidence. The German IFO Institute's business climate index for January surged to 104.2 points, its highest level since last June, and up from 102.4 for the previous month. It also beat a consensus view of 103.0.

The dollar index, which measures the US unit against a basket of six major currencies, slipped to 79.762 from 79.974 on Thursday.

Against the yen, the dollar bought ¥90.94 compared to ¥90.38 before.

Sterling changed hands at $1.5804 from $1.5787 previously as investors mulled disappointing GDP data.

The UK economy contracted by 0.3% during the fourth quarter of 2012, worse then the 0.1% GDP decline predicted.


CJ

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