* Euro helped by sentiment survey, PMI
* Yen firms as stock markets fall
* Norwegian crown down after PMI
By Laurence Fletcher
LONDON, Jan 6 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
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.