The euro rose against the dollar on Monday as risk-averse sentiment eased on improved economic data and as stocks pared losses, but markets remained skittish before key central bank events and U.S. jobs data this week.
European stock markets shed losses made at the outset on news that CIT Group Inc ( CIT - news - people ), a U.S. lender to hundreds of thousands of small and medium-sized businesses, filed for bankruptcy on Sunday.
Market sentiment was also buoyed after data confirmed an expansion in euro zone manufacturing activity. Final euro zone manufacturing purchasing managers' index for October rose to 50.7 in October from 49.3 in September - in line with an earlier flash estimate and economists' forecasts.
It was the first time the reading has been above the 50.0 mark that divides growth from contraction since May 2008 and its highest level since April 2008 when it also stood at 50.7.
"Today's data suggest that the recovery in the euro area is starting to gather pace," said Colin Ellis at Daiwa Securities.
The euro rose as high as $1.4796. By 1237 GMT, it was up 0.3 percent at $1.4768.
The single currency also hit the day's high against sterling of 90.37 pence, as the pound was hit, with the government set to finalise plans this week to carve up rescued banks Royal Bank of Scotland ( RBS - news - people ) and Lloyds, triggering selling in their shares.
The UK currency is sensitive to news about the country's struggling banking system given the economy's heavy dependence on its financial sector, and a rise in UK manufacturing PMI data failed to boost the currency.