* Euro rises on German election but gains limited
* Merkel wins election but must find ruling partner
* Above-forecast German, French, euro zone PMIs help
* Aussie rises as China factory sector growth picks up
By Jessica Mortimer
LONDON, Sept 23 The euro rose on Monday after
German Chancellor Angela Merkel won a third term in office and
German, French and euro zone private sector surveys came in
better than expected.
Merkel's conservatives fell short of the votes needed to
rule on their own, however, and may have to convince leftist
rivals to join a coalition government.
"It will be tough to buy the euro strongly on the German
elections as it will be some time before we know what kind of
coalition we will get," said Antje Praefcke, currency strategist
at Commerzbank in Frankfurt.
"Sentiment is cautiously optimistic, dependent on data ... A
coalition with the SPD should result in euro-friendly and
The euro was up 0.1 percent at $1.3533, but stayed
below chart resistance at last week's 7-1/2 month high of
Forecast-beating German, French and euro zone purchasing
managers' surveys also helped the single currency on Monday,
with Tuesday's German Ifo sentiment data also set to be
a focus of market attention.
The dollar eased 0.1 percent versus a basket of currencies
to 80.324, but remained above a seven-month low of 80.060
set last week after the U.S. Federal Reserve surprised markets
by keeping the pace of its bond-buying stimulus unchanged.
Comments by a top Federal Reserve official on Friday
suggesting the central bank may scale back stimulus next month
helped lend some support to the dollar.
Other Fed officials including Dennis Lockhart, William
Dudley and Richard Fisher are due to speak later on Monday.
The Australian dollar and other riskier currencies gained on
signs of a turnaround in the Chinese economy as the flash HSBC
Purchasing Managers' Index (PMI) showed factory sector growth
accelerated in September.
The Australian dollar rose 0.3 percent to $0.9423.
But Satoshi Okagawa, senior global markets analyst for
Sumitomo Mitsui Banking Corporation in Singapore, said caution
about the outlook for China's economy may be in order given
China's economic reform efforts.
"It will probably be hard for the Australian dollar to keep
rising to levels above $1.0 and to head sharply higher from
there," he added.
Elsewhere, the dollar fell 0.4 percent against the yen
at 98.93 yen, with traders saying it faced strong chart
resistance on the approach to the 100 yen level.