Euro firms against dollar on risk appetite

TOKYO, July 1, 2011 (AFP) - The euro firmed against the dollar in Asia Friday with market players shrugging off China's weaker-than-expected manufacturing data amid relief over recent progress in the Greek debt crisis.

The single European currency rose to $1.4513 in Tokyo afternoon trading from $1.4499 in New York late Thursday.

Two separate surveys showed growth in China's manufacturing activity almost stalled in June, with the official purchasing managers index falling for the third straight month to 50.9 in June from 52.0 in May.

But China's weaker-than-expected manufacturing sentiment for June is not enough to seriously dent improving risk appetite, said Standard Chartered global head of FX strategy Callum Henderson.

Foreign exchange markets "aren't really concerned about the data amid the post-Greece euphoria," he told Dow Jones Newswires.

But the decline is largely a function of an inventory run-down, and "talk about a hard landing for China is overdone," Henderson said.

The yen lost ground after the Bank of Japan said in a quarterly Tankan survey Friday that the nation's business confidence plunged in the months following the March 11 earthquake and tsunami.

The euro firmed to 117.12 yen from 116.76 yen in New York and the dollar rose to 80.72 yen from 80.55 yen.

The Greek parliament on Thursday passed legislation implementing a 28.4-billion-euro ($40 billion) austerity package despite fierce clashes in Athens, in a desperate bid to avoid national bankruptcy.

"Although the Greek debt problems have not been fundamentally resolved, concerns have eased for now after the parliament approval," said Sumino Kamei, senior analyst at the Bank of Tokyo-Mitsubishi UFJ.

The European Central Bank is scheduled to hold a policy meeting on July 7.

"The euro is expected to move on a firm tone on expectation for the ECB's rate hike next week," Kamei said.

Kamei also said the weak Tankan survey sent the yen broadly lower against other major currencies.

The survey from the central bank showed large manufacturer sentiment in June dropped to "minus nine" from "six" in March, a plunge of 15 points and the first negative reading in five quarters.

The market is now focusing on US ISM manufacturing data due out later in the day after stronger-than-expected manufacturing data in the Chicago region released Thursday improved sentiment for the dollar, dealers said.

The dollar was mostly lower against other Asian currencies, falling to Sg$1.2260 from Sg$1.2288 on Thursday, to 1,063.90 South Korean won from 1,068.35 and to Tw$28.69 from Tw$28.72.

It also slipped to 8,545.00 Indonesian rupiah from 8,591.75 and to 43.26 Philippine pesos from 43.36 while edging up to 30.75 Thai baht from 30.71.

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