Euro steady on ECB comments; yen falls on U.S., Europe data

By Dion Rabouin

NEW YORK (Reuters) - The euro held firm against the dollar on Monday after comments from two members of the European Central Bank's governing council lowered expectations for increasing its bond-purchase program next month.

The euro clung to a 0.05 percent gain versus the dollar to $1.1019 , retreating from earlier highs spurred by comments from ECB President Mario Draghi and governing council member Ewald Nowotny.

In separate newspaper interviews, both officials said a move by the ECB to expand its "quantitative easing" bond-buying program and cut its deposit rate further in December was not a given and that any further stimulus measures remained open for discussion.

Expectations that the euro zone would continue to add to monetary stimulus while the U.S. Federal Reserve is seen tightening policy soon, perhaps as early as December, had backed a U.S. dollar rally over the last few weeks.

U.S. manufacturing data and increased investor risk appetite helped the dollar edge up against the yen on Monday, reversing losses from earlier in the day and sending traders out of the safe-haven Japanese currency.

The dollar gained 0.1 percent to 120.72 yen after the Institute for Supply Management Manufacturing Purchasing Managers' Index showed slight manufacturing growth in October.

The figures showed manufacturing employment slowed in October, but new manufacturing orders increased. The 50.1 ISM reading just exceeded expectations of 50.0 from economists polled by Reuters. A reading above 50 indicates growth in manufacturing.

The euro also gained against the yen , pushed upward by euro zone data showing some signs of improvement. Markit's final manufacturing PMI for the region was at 52.3 last month, up only slightly from September and a preliminary October reading of 52.0.

The single currency increased 0.2 percent to 132.97 yen per euro.

"The euro zone was a little bit stronger this morning, and China is obviously still a concern," said Fabian Eliasson, vice president for currency sales at Mizuho Corporate Bank in New York. "But overall, I think we’re still playing the Fed card for the time being."

(Editing by Lisa Von Ahn)

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