The euro gained further versus the U.S. dollar to trade above $1.23 on Tuesday after solid demand at debt auctions soothed worries about euro zone debt problems and investors covered short positions on increased risk appetite.

The euro rose as high as $1.2305 EUR= on electronic trading platform EBS, its highest level since June 3. It was last up 0.7 percent at $1.2296. (Editing by James Dalgleish)

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