FOREX-Euro gains after upbeat economic data, yen firm
* Euro helped by sentiment survey, PMI
* Yen firms as stock markets fall
* Norwegian crown down after PMI
LONDON, Jan 6 (Reuters) - The euro rebounded on Monday, as positive euro zone data suggested the European Central Bank will not loosen policy further any time soon.
The single currency was last year's best-performing major currency - driven by factors such as euro zone banks repatriating funds to shore up their capital bases and repaying cheap loans to the ECB - but has lost ground in recent days.
The euro recovered from a one-month low during Asian trading to reach 0.1 percent at $1.3604, finding support as euro zone sentiment hit its highest in nearly three years.
And the euro zone Composite Purchasing Managers Index, which gauges how thousands of manufacturing and services companies fare every month, rose to 52.1 in December, in line with forecasts, with readings above 50 indicating growth.
Investor focus turned to a German inflation report due at 1300 GMT, which is expected to show a slight acceleration on an annual basis. That would help ease fears of deflation, although it remains below the ECB's target.
The data come before the ECB's first policy meeting of 2014 on Thursday. While another rate cut after November's surprise move is seen an unlikely, the bank has the ability to issue further cheap loans to banks.
"The big question is whether the recovery in the euro zone is real or sustainable. This indicates at least it isn't faltering," said Marshall Gittler, head of global FX strategy at IronFX Global. "There's no need (for them) to come out with a sudden move. I'd expect to see the same sort of message from (ECB President) Draghi as last week."
At the end of last month, Draghi said in a magazine interview he saw no urgent need to cut rates further and no signs of deflation.
The yen was also up on Monday, although it gave back some early gains, pulling away from recent five-year lows versus the dollar and the euro as a fall in global stocks prompted traders to buy the safe-haven Japanese currency.
The dollar fell 0.3 percent to 104.56 yen while the euro was down 0.1 percent at 142.25 yen.
Asian shares led global stocks lower after growth in China's services sector slowed sharply last month.
The Nikkei and the yen - last year's weakest major currency - tend to move in opposite directions. A rally in the index is often a signal for speculators to sell the yen and buy higher-yielding currencies, while that trade may be unwound when risk appetite falls.
"This is very much driven from Asia ... The yen has been used as a funding currency and will gain support," said Ian Stannard, head of European currency strategy at Morgan Stanley.
The Norwegian crown extended losses against the euro after a Norwegian Purchasing Managers' Index fell to 51.6 percent in December, below forecasts of 53.4.
The euro was last 0.6 percent higher at 8.41 crowns .
Investors are looking ahead to minutes of the U.S. Federal Reserve's December meeting, due on Wednesday, for signs of how trading in the early part of the year will unfold. The minutes could hint at the timing and pace of any further reductions in Fed stimulus.
Friday will bring the December U.S. payrolls report, which could suggest whether domestic job growth is strong enough for the Fed to continue tapering its asset buying.