* U.S. mid-Atlantic manufacturing up, jobless claims rise
* Shanghai stock index jumps 4.5 pct
* Traders cautious in holiday-thinned markets
(Adjusts first paragraph, updates prices)
By Steven C. Johnson
NEW YORK, Aug 20 (Reuters) - The dollar was treading water
against the euro and yen on Thursday in thin trade as economic
data added to uncertainty about the U.S. and global outlook.
A report from the Philadelphia Federal Reserve showed
regional factory activity advanced while a rebound in Chinese
stocks also lifted spirits. But an increase in the number of
U.S. workers filing first-time jobless claims last week kept
investors cautious and capped euro gains against the dollar.
For more see [].
Over the last year, the low-yielding dollar and yen have
tended to fall when markets grow more optimistic and as
investors buy higher-yielding assets and currencies.
That relationship has started to weaken, though, and
analysts said investors appear unwilling to extend already
large positions against the U.S. currency.
"We'll have a recovery but it's going to take a while to
gain traction," said Meg Browne, senior currency strategist at
Brown Brothers Harriman in New York. "U.S. interest rates will
stay low for a while yet, and so now you're seeing a lot of
positioning because there's not a lot to trade on."
The dollar was up 0.1 percent at 94.13 yen <JPY=> after
hovering in a tight 93.86 to 94.55 range. The euro was little
changed at $1.4230 <EUR=>, off a $1.4256 session peak, and at
134.00 yen <EURJPY=>.
Sterling was down 0.3 percent at $1.6479 <GBP=> after weak
data on British public finances underscored concern about the
country's fiscal situation.
The Norwegian crown rose, hitting its highest level against
the euro <EURNOK=> since March, after data showed Norway's
non-oil economy grew 0.3 percent from April to June. Last week,
Norges Bank, the country's central bank, hinted it may hike
interest rates in early 2010. []
The rise in U.S. jobless claims did add to concerns that
the strongest U.S. data has so far come from manufacturing,
which accounts for only a small slice of the U.S. economy.
"For a real recovery, we need the consumer to be in the
game, but with rising unemployment, the consumer is not going
to be out there spending," said Kurt Karl, chief U.S. economist
at Swiss Re in New York.
He said the jobless claims report "is indicative that this
is definitely not going to be a V-shaped recovery."
U.S. <.SPX> and European <> stocks rose, following a
4.5 percent surge in the Shanghai Composite Index <>,
which shed nearly the same amount the previous day.
Market participants have been focusing on the Shanghai
index, which in the two weeks to Wednesday had shed nearly 20
percent, rattling confidence in a global recovery.
"It is an understandable reaction as Chinese equities have
acted as a good leading indicator for broader market dynamics
over the past year," Lee Hardman, currency economist at Bank of
Tokyo-Mitsubishi UFJ, wrote in a research note to clients.
But he said perceptions that China's economic recovery is
essential to global recovery may be overdone, adding that world
stock gains owe more to the flood of money central banks have
pumped into their economies than from China's outlook.
(Additional reporting by Vivianne Rodrigues in New York and
Naomi Tajitsu in London; Editing by James Dalgleish)
