The New Zealand dollar rose to a five-month high against the euro after European inflation slowed and amid speculation Spain needs help in meeting its interest payments.

The New Zealand dollar rose to 60.80 euro cents at 8am from 60.46 cents yesterday. The kiwi dollar was little changed on 78.84 US cents just after 8am this morning.

European inflation slowed to 2.8 percent in December from a three-year high of 3 percent a month earlier giving the European Central Bank Union room to lower interest rates.

Bloomberg reported Spain's Treasury gave a verbal guarantee to an unidentified lender to advance funds to the Valencia government to make a 123 million euro payment.

Spain will seek help from the European Union's rescue fund and the International Monetary Fund, the Spanish newspaper Expansion said.

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"The European debt crisis has moved back into focus," said Mike Jones, market strategist at Bank of New Zealand. "The New Zealand dollar has been more or less one of the strongest performers over night."

There is no significant New Zealand data set for release this week. In the US, non-farm payrolls and employment rate will be released on Friday.

The kiwi dollar was recently at 60.38 yen down from 60.46 yen yesterday. It traded at 75.95 Australian cents from 76.19 cents and was little changed at 50.38 British pence.

The trade-weighted index fell to 69.82 from 70.03 yesterday.