By Alun John

HONG KONG (Reuters) - The euro rallied on Monday, taking heart from news of a possible meeting between U.S. President Joe Biden and Russian President Vladimir Putin to discuss the crisis in Ukraine.

Many details remain unclear but the office of French President Emmanuel Macron said the two leaders had agreed in principle to a summit on "security and strategic stability in Europe."

The White House said in a statement that Biden had accepted the meeting "in principle" but only "if an invasion hasn't happened."

The euro climbed 0.35% higher to $1.1362 after it lost some ground in early trade. The risk-friendly Australian dollar gained 0.55%.

"Russia-Ukraine tensions are starting to dominate risk sentiment and price action. The market is likely to keep chasing headlines without any clarity on the eventual outcome," said analysts at Barclays (LON:BARC) in a note.

The yen in contrast gave up most of its early gains to trade at 114.97 yen per dollar. Like the Swiss franc, the safe-haven Japanese currency has benefited from the tensions spurred by Russia's military build-up on Ukraine's borders.

Sterling gained 0.19% to $1.3623 ahead of the release of PMI data which will give an indication of the impact of the Omicron strain of COVID-19 on the British economy.

The dollar index, which measures the greenback against six peers, fell 0.28%.

Currency markets participants are also focused on central bank policy, seeking clues on the speed and size of interest rate hikes in major markets.

Markets will be closely watching remarks from U.S. Federal Reserve policy makers this week for any hint that an expected rate hike at the Fed's March meeting could veer more towards to 50 basis points instead of the current consensus for a 25 basis point increase.

Public remarks are also due from several BOE policy makers.

Bitcoin BTC=BTSP> recovered a little from a mild bruising over the weekend. The world's largest cryptocurrency was up 2.3% at around $39,000.

Early on Monday it touched a two-week low of $38,210.