By Richard Hubbard
LONDON, Feb 1 (Reuters) - The euro hit a fresh 14-month high
and European stocks gained on Friday after economic data raised
hopes that the region's downturn has eased, but moves were
limited as investors await a U.S. jobs report.
Euro zone factories had their best month in nearly a year
during January although the currency bloc is likely to remain
mired in recession for a few more months, the latest reading of
Markit's Purchasing Managers' Index (PMI) showed.
'Providing there are no further setbacks to the region's
debt crisis, these data add to the expectation that the euro
zone is on course to return to growth by mid-2013,' said Chris
Williamson, chief economist at data compiler Markit.
The euro hit a high of $1.3657 after the data came
out, its highest level since November 2011. The common currency
also hit a 33-month high against the yen, rising more than 1
percent to 125.96 yen.
The pan-European FTSEurofirst 300 index extended
its recent gains by 0.4 percent to 1,169.14 points, near a
23-month high after solid rally since the start of the year.
London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX were up between 0.5 and 0.8 percent.
Earlier, China's official PMI for January eased to 50.4,
missing market expectations for a rise and underscoring the
fragility of the recovery from the economy's weakest year since
However, a separate private survey showed that growth in
China's giant manufacturing sector hit a two-year high in
January as domestic demand strengthened, underlining hopes the
nation's economic recovery is slowly gaining momentum.
The Chinese data left MSCI's broadest index of Asia-Pacific
shares outside Japan little changed
have already risen by a
quarter of a percentage point since the start the year - the
equivalent of a standard ECB interest rate increase - and are
likely climb by at least the same amount again if the money
continues to drain rapidly from the system.
For Europe's struggling countries and the ECB this is not an
ideal situation, effectively tightening monetary policy and
creating unwanted stress just as economies are showing fragile
signs of improvement.
Friday's U.S. nonfarm payrolls data due at 1330 GMT could be
a another factor to drive the euro higher, as a strong report
would knock the safe-haven dollar.
The dollar was trading at a 3-1/2 month low against a basket
of currencies on Friday after falling 0.3 percent to
Employers are expected to have added 160,000 new jobs to
their payrolls in January, a marginal step up from December's
155,000 gain, according to a Reuters survey of economists. The
unemployment rate is seen holding steady at 7.8 percent.
The U.S. economy unexpectedly contracted in the fourth
quarter, its weakest performance since emerging from recession
in 2009, and it grew just 2.2 percent in the whole of 2012.
The U.S. ISM factory survey, a national report on the state
of American manufacturers, is also due at 1500 GMT. [ECONUS
($1 = 0.7367 euros)
(Additional reporting by Marc Jones,; editing by Philippa
((email@example.com)(Tel +44 207 5423215))
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