* Euro rises on better-than-expected euro zone PMI
* Yen falls more than 1 percent against euro and dollar
* Dollar/yen gets lift from short-covering -trader
* Post-BOJ drop in dollar/yen seen as temporary pullback
By Anooja Debnath
LONDON, Jan 24 (Reuters) - The euro rose against the yen and the dollar on Thursday after better-than-expected economic data indicated the worst of the crisis in the single currency zone may have passed.
The euro saw choppy trade after flash manufacturing and services sentiment data showed a divergence among countries, with a disappointing performance in France balanced out by numbers out of Germany showing its private sector expanded the most in a year.
Traders said macro funds and asset managers were buying the euro and if data continued to show that prospects for the region were improving, the currency could rise further.
“The euro dipped on French numbers and was up on the German data. On the whole there is positive sentiment for the euro,” said Niels Christensen, FX strategist at Nordea.
“...(It) seems capped at $1.34 for now but it is fair to say the euro is still firm across the board.”
The common currency was flat against the dollar at $1.3322, not far from $1.3404, a 11-month high touched on Jan. 14, which is also acting as near-term resistance.
The euro rose 1.2 percent against the yen to touch 119.58 yen, inching towards a 20-month high of 120.73 yen hit on Friday.
Against the yen, the dollar rose 1.15 percent to a session high of 89.65 yen, pulling away from a one-week low of 88.06 yen hit the previous day. The dollar had reached a 2-1/2 year high of 90.25 yen on Monday.
Analysts said the influential German Ifo survey on Friday along with the announcement on the size of next week’s first repayments of cheap three-year loans taken by banks from the European Central Bank just over a year ago would sway the euro in the coming session.
Banks took more than 1 trillion euros in the LTRO loans from the ECB. A Reuters poll showed traders expected about 100 billion to be paid back next week.
The yen fell across the board. Its weakness became more entrenched after Japanese Prime Minister Shinzo Abe said he expected the Bank of Japan to achieve its 2 percent inflation goal as soon as possible.
Traders also attributed the yen’s losses to position squaring by short-term players after the currency’s bounce over the past few days.
The yen had rebounded earlier this week after the BOJ disappointed some, who were expecting an immediate increase in its asset-purchasing programme. This was despite the central bank delivering its most aggressive policy easing yet to snap the economy out of years of stagnation.
The dollar’s pullback versus the yen after the BOJ’s announcement on Tuesday has proved shallow so far and many believe dollar/yen will continue to climb over time.
“We saw a little clearout of short-term speculative positions, which is only healthy in an uptrend. I don’t think there’s any change to the trend because of it,” said Jesper Bargmann, Asia head of G11 spot FX for RBS in Singapore.
“I think we will struggle to break 91, but I will still keep looking for us to trade above 90 in the short term,” Bargmann said, referring to the outlook for the dollar versus the yen over the next week or so.
The yen could slide further, partly because BOJ Governor Masaaki Shirakawa, whose term ends in April, is seen likely to be replaced with someone more dovish, who could then bring forward any easing.