Thursday April 23, 2009 - 10:40:42 GMT
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Reuters - www.reuters.com
FOREX NEWS-Euro extends gains on better PMI data, stocks
* Euro rises on improved EZ PMI data, stock gains
* Euro hits session high $1.3071 <EUR=>, up 0.8 pct vs yen
* EZ flash manufacturing, services PMI at 6-month highs
* Investors wary of U.S. bank stress tests
(Updates prices; changes byline, dateline; previous TOKYO)
By Jessica Mortimer
LONDON, April 23 (Reuters) - The euro extended gains against
the dollar and the yen on Thursday, helped by data giving
tentative signs that the euro zone economy may be emerging from
the worst of the recession and gains in equity markets.
Purchasing managers' surveys showed the euro zone's
manufacturing and services sector had their best performance in
six months, while industrial orders fell by less than analysts
Sentiment was also helped as European stocks rose 0.2
percent .FTEU3, shaking off earlier losses, while U.S. stock
futures SPc1 DJc1 pointed to gains on Wall Street later in
Analysts said there has been some stabilisation in risk
sentiment, helped by the view that the global economy may be
over the worst, that has boosted the euro along with currencies
viewed as higher risk such as sterling and the Australian
However, caution ahead of the results of "stress" tests on
U.S. banks and worries about a sizeable deterioration in the
fiscal health of some of the world's biggest economies was
helping to limit any rebound in riskier assets, they said.
"There has been a broad stabilisation in financial risk
premia in currency markets," Tullett Prebon G7 market economist
Lena Komileva said.
"There is a general belief that global growth is stabilising
that has been supported by the stronger euro zone PMI data," she
said, but added there is "not a lot of confidence behind this".
At 1002 GMT, the euro rose 0.5 percent against the dollar to
$1.3065 <EUR=>, having hit a session high $1.3071, and jumped by
0.8 percent against the yen to 128.44 yen <EURJPY=R>.
The common currency was well above a low of $1.2885 against
the dollar hit on EBS trading systems on Wednesday, which was
its weakest since March 16.
Traders noted, however, that a large options expiry at
$1.3000 in euro/dollar due later on Thursday may be preventing
the pair from moving too far away from that level.
Among currencies seen as higher risk, sterling rose 0.5
percent against the dollar to $1.4550 <GBP=>, rebounding after
steep falls the previous day triggered by a grim UK budget,
while the Aussie dollar rose 0.9 percent to $0.7112 <AUD=>.
The yen also fell on profit-taking after heightened risk
aversion bolstered the Japanese currency on Wednesday, with the
dollar up 0.3 percent at 98.30 yen <JPY=>.
BETTER PMI DATA
The latest provisional euro zone purchasing managers'
surveys for April showed the indices for both the services and
manufacturing sectors improved much more than expected,
suggesting the region's deep recession is no longer worsening.
The readings were their highest in six months, although the
PMI indices remain well below the 50 level that divides growth
from contraction. See [ID:nLAG003397].
"The improvement in the April manufacturing and service
sector purchasing managers' surveys is encouraging, and it adds
to the increasing signs that euro zone contraction is starting
to moderate," Global Insight economist Howard Archer said in a
He added, however, that "actual recovery still looks some
distance away" and the improved figures would not prevent the
European Central Bank from cutting interest rates by another
quarter point and announcing non-conventional measures in May.
Other data released on Thursday showed euro zone industrial
new orders fell by 0.6 percent during February, much smaller
than the 2.4 percent fall that economists polled by Reuters had
On an annual basis, however, orders tumbled by 34.5 percent
year-on-year, the steepest drop since measurements began in
1996. See [ID:nLN946589].
Meanwhile, investors remain cautious about the results of
the U.S. government's "stress" tests on U.S. banks, while
concerns linger about the fate of troubled U.S. automakers.
The Wall Street Journal reported that U.S. banks will be
briefed by regulators as early as Friday on how they performed
in the tests before the results are made public later.
Some estimates of banks' likely losses that were used in the
stress tests were tougher than expected, the newspaper said.
(Reporting by Jessica Mortimer; Editing by Ruth Pitchford)
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