TOKYO, Japan -- The euro rose against the dollar and yen in Asian trade on Tuesday after European leaders took action to rescue the continent's banking sector, dealers said.

The euro changed hands at $1.3668, up from $1.3576 in New York late Monday. The single European currency rose to 140.52 yen from 138.50.

European leaders on Sunday reached a deal to pump capital into hard-hit banks and underwrite loans, mirroring a plan by British Prime Minister Gordon Brown.

"Because the European policies announced so far are more concrete and powerful, the euro and pound keep rallying against the dollar," said Marito Ueda, currency dealer at FX prime.

Sterling rose to $1.7450 from $1.7331, after the British government said it would invest up to 37 billion pounds ($64 billion) in ailing British banks Royal Bank of Scotland, HBOS and Lloyds TSB.

The dollar also rose against the yen going up to 102.87 from 102.01.

"The firmer dollar against the yen reflects improved investor confidence following rallies on stock markets," Ueda said.

"Markets are watching if further policy measures will come from the US government and if stocks markets will really calm down," he said.

Global stock markets soared on Monday, with double-digit percentage gains in the United States, Europe and Hong Kong, after the weekend meetings of the Group of Seven finance chiefs and European leaders.

Japanese share prices soared more than 13 percent in morning trade on Tuesday, the first session after the G7 meeting. Japanese markets were closed on Monday for a holiday.