The U.S. dollar tumbled on Friday and hit a record low against the yen on speculation Europe was closer to solving its debt crisis, but most analysts doubt that policy-makers will produce a comprehensive plan soon.

France and Germany said in a joint statement that European leaders would discuss a solution to the crisis at a summit on Sunday, but no decisions would be adopted before a second meeting to be held by Wednesday at the latest.

Optimism that European leaders will take more measures to contain the crisis after conflicting news reports this week revived investor appetite for stocks and other growth-oriented investments and cut demand for the safe-haven greenback.

If they even show a shadow of a solution, it's positive for capital markets globally, said Stephen Wood, chief market strategist at Russell Investments in New York, which manages $163 billion.

I have modest expectations. This is a political problem which has economic implications. Unfortunately, the markets are held captive, he said.

Adding to losses in the dollar, Federal Reserve Governor Daniel Tarullo said on Thursday there is need for additional stimulus measures, and the Fed should consider buying more mortgage bonds to boost the weak housing sector and economy. Fed easing is seen as negative for the dollar because it lowers U.S. yields.

But Dallas Fed President Richard Fisher on Friday disagreed with Tarullo on buying more securities to help the housing market.

Against a basket of major currencies, the dollar last traded down 0.87 percent at 76.305 compared with 76.249 earlier, the lowest level since mid-September.

The dollar index was poised to fall for a second week in a row after last week's 2.67 percent drop, which was the biggest since May 2009.

Against the yen, the dollar fell as low as 75.78 yen on trading platform EBS , surpassing its previous record low of 75.941 set in August, bringing back into focus the threat of official intervention to weaken the Japanese currency.

The greenback last traded down 1 percent at 76.09 yen, coming off lows on reported buying from Japanese banks at the 76.00 level. At current levels, it was on pace for its biggest daily fall since Aug. 26.

Against the dollar, the euro rose 0.5 percent to $1.3846 , having hit $1.3900 on Reuters data and recovering from a low of $1.3703.

With doubts over a meaningful plan to contain Europe's debt crisis, analysts see the euro could fall to $1.30 by year-end.

The euro fell against other major currencies.

It lost 0.5 percent to 105.35 yen . It slipped 0.4 percent against sterling and shed 0.6 percent versus the Swiss francs .

NAGGING DOUBTS

Most analysts, however, said that Friday's stock market rally and sell-off in the dollar was hardly a proxy of confidence in a meaningful solution soon to contain Europe's fiscal problems in.

This was a rally from oversold levels. It's not a rally because you think a deal is really going to happen, said Komal Sri-Kumar, chief global strategist with TCW Group in Los Angeles, which oversees about $114 billion.

There were few signs that European leaders are close to agreeing on raising the firepower of the European Financial Stability Facility -- the region's 440 billion euro bailout fund -- or on the amount of recapitalization that European banks need and how much of a haircut private bondholders should take on their Greek debt.

Even if these issues are addressed at the upcoming summits in Brussels, longer-term risks -- including France's possible loss of its top credit rating and the euro zone tipping into recession -- are seen as a drag on the euro, analysts said.

Growth is still low for the region and this will weigh on the euro ultimately, said Arthur Hovsepian, emerging markets and currency strategist with Payden & Rygel in Los Angeles, which manages $60 billion in assets.