The euro extended gains versus the U.S. dollar to rise 1 percent on Tuesday as solid demand at European debt auctions and increased risk appetite prompted investors to cover short positions.

The euro rose as high as $1.2344 on electronic trading platform EBS EUR=, its highest level in two weeks. It was last at $1.2342, up 1 percent on the day.

(Editing by Chizu Nomiyama)