The euro climbed against the dollar in Asia on Monday after former EU commissioner Mario Monti was nominated as new prime minister of Italy, raising hopes of progress in the debt-wracked continent.

The euro stood at ê1.3769 in Tokyo trade, up from ê1.3739 in New York late Friday. The European common unit also firmed to 106.29 yen from 105.97 yen.

The dollar was flat at 77.17 yen compared to 77.12 yen.

Former EU commissioner Mario Monti was nominated Sunday to replace Silvio Berlusconi as head of a new technocratic cabinet in Italy, tasked with battling a crippling crisis in the eurozone's third largest economy.

The exact composition of the cabinet is set to be unveiled in the coming days ahead of a confidence vote in parliament that will formally give it power.

Italian lawmakers on Saturday approved a package of economic reforms that Berlusconi set as the precondition for his resignation amid global market turmoil.

"After Italy was closely in focus last week, the news gave some relief to the market as uncertainty over the political situation receded," said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ.

Fears grew last week that Italy could be the next eurozone economy to be forced to seek a bailout after the interest rate it pays to borrow topped the level seen as unsustainable for the country to service its mountain of debt.

HiFX Senior Trader Stuart Ive told Dow Jones Newswires: "Sentiment is definitely buoyed by the fact that something constructive has happened over the weekend."

"At this point in time Berlusconi has gone but we don't know what the IMF (International Monetary Fund) and what the ECB (European Central Bank) will find when they start going through the Italian accounts," Ive said.

If Italy can make a smooth start with its new interim government, the market's focus could swing back to what role the European Central Bank and the eurozone rescue fund, or EFSF, will play in coming months, UBS FX strategists said.

"There is still room to move on interest rate cuts, which could yet prove another form of stimulus," they said.

Also positive for the euro was the launch on Friday of a new government in Greece, headed by the European Central Bank's ex-deputy chief Lucas Papademos, after a historic power-sharing deal between the country's main rival parties.

The euro will likely remain choppy against the yen as the new Italian and Greek prime ministers attempt to navigate local politics, a senior dealer at a major Japanese bank said.

"What matters is whether they can implement the strict austerity measures," the dealer said.