* Dollar firmer versus basket of currencies
* Euro falters despite encouraging euro zone, German data
* Sterling retreats after UK PMI data
* Market awaits U.S. ISM manufacturing reading
(Adds quotes, updates prices, changes byline, changes
dateline, previous LONDON)
By Wanfeng Zhou
NEW YORK, Sept 1 (Reuters) - The U.S. dollar edged higher
against major currencies on Tuesday as a decline in stock
prices boosted the greenback's safe-haven appeal.
European shares <> fell despite better-than-expected
euro zone economic data and stabilization in China's stock
market after a rout on Monday. U.S. stock futures <SPc1> <DJc1>
pointed to a lower open.
"The general theme once again is a reduction in risk
appetite that's been triggered by softer euro zone equities,"
said Omer Esiner, senior market analyst at Travelex Global
Business Payments in Washington.
"The pullback in stocks overnight despite some upside
surprises to European data has once again kept demand for
safe-haven dollars elevated."
In early New York trading, the dollar index, which tracks
the performance of the greenback versus a basket of six major
currencies, was up 0.2 percent at 78.368, recovering from a
session low of 77.944 <.DXY>, according to Reuters data.
The euro was last down 0.2 percent at $1.4298 from a
session high of $1.4377 <EUR=> and down 0.2 percent at 132.94
yen. <EURJPY=R>
Data on Tuesday showed euro zone purchasing managers' index
(PMI) rose to 48.2 in August against forecasts for a 47.9
reading and German unemployment unexpectedly fell in August.
<For related news click [] []>.
The data comes before a European Central Bank policy
meeting on Thursday widely expected to keep benchmark rates
steady at a historic low of 1 percent with the focus on
policymakers' outlook on the economy.
Falling stocks benefited the yen. The Japanese currency
<JPY=> held at 92.98 yen per dollar, little changed on the day
but below Monday's seven-week high of 92.53, according to
Reuters data.
ISM AWAITED
Traders will keep a close eye on U.S. ISM manufacturing
data due at 10 a.m. (1400 GMT), which is forecast to show a
reading of 50.5 in August versus 48.9 the previous month.
"Today, one of the focuses is going to be on the ISM data,
which is expected to rise above 50 for the first time since
January, 2008," said Meg Browne, senior currency strategist at
Brown Brothers Harriman in New York.
"We're likely to have firm U.S. data," she added. "In this
kind of market, I think that'll help provide a little bit of a
driver for the foreign currencies."
Sterling erased early gains against the dollar and the euro
after an unexpected dip in UK manufacturing activity in August,
stoking concerns about the pace of recovery in the British
economy. []
Sterling was down 0.5 percent on the day at $1.6198 <GBP=>
and was 0.3 percent lower against the euro at 88.26 pence
<EURGBP=>.
The headline UK PMI fell to 49.7 in August from a
downwardly revised 50.2 the previous month. It was the first
fall since February and well below the consensus forecast for a
rise to 51.5. []
In other trading, the Australian dollar fell 0.9 percent to
US$0.8360 after the central bank sounded less hawkish than some
had anticipated.
The RBA, holding its cash rate at 3.0 percent as expected,
said the current low level of rates was appropriate, countering
speculation it would adopt an explicit tightening bias. See
[]
(Additional reporting by Tamawa Desai; Editing by Kenneth
Barry)
