The euro rose against the dollar, erasing earlier losses, as some stocks advanced and optimism increased that European leaders will be able to agree on measures to help solve the region’s debt crisis.

The euro dropped earlier against most of its counterparts after a German government official said the nation rejects proposals to combine current and permanent euro-area rescue funds.

The European Central Bank is forecast to announce an interest-rate cut tomorrow and European leaders gather for a summit in Brussels during the next two days.

The official’s comments came after the Financial Times reported yesterday that European Union leaders may agree on a package including the existing 440 billion euro ($588 billion) bailout fund and a new 500 billion euro facility.