* Euro rises broadly as extreme risk aversion eases
* Euro hits one-week high of $1.3086 <EUR=>, up 1.0% vs yen
* EZ flash mfg, services PMI at 6-month highs
*Sterling up vs dollar after falling on UK budget on Wed
(Recasts, adds quotes, updates prices)
By Tamawa Desai
LONDON, April 23 (Reuters) - The euro rose broadly on
Thursday as extreme risk aversion eased on some brighter signs
for the economy and banking system, prompting gains in equities,
although wariness over the financial system kept gains in check.
Sterling also recovered against the dollar after taking a
beating the previous day as the UK budget showed a shocking
deterioration of public finances.
Sentiment was helped as European stocks rose 0.6 percent
<>, shaking off earlier losses and London's FTSE index
also rose 1.0 percent <>. U.S. stock futures <SPc1> <DJc1>
also pointed to a higher Wall Street open.
"There has been a broad stabilisation in financial risk
premia in currency markets," Tullett Prebon G7 market economist
Lena Komileva said.
"There is a general belief that global growth is stabilising
that has been supported by the stronger euro zone PMI data," she
said, but added there is "not a lot of confidence behind this".
At 1122 GMT, the euro rose 0.5 percent against the dollar to
a one-week high of $1.3086 <EUR=> after hitting a one-month low
of $1.2885 on trading platform EBS on Wednesday.
Traders noted, however, that a large euro/dollar options
contract with strike price of $1.3000 was set to expire later
in the day. That may be preventing the pair from moving too far
away from that level, they said.
The single currency also jumped 1.0 percent against the yen
to 128.73 yen <EURJPY=R>. The euro also reversed earlier losses
against sterling to briefly hit a one-week high of 90.04 pence
<EURGBP=>.
GREEN SHOOTS
"The PMIs gave some encouraging signs that are adding to the
green shoots story, not just in Europe but globally," said BNP
Paribas currency strategist Ian Stannard.
"The euro has the potential to move higher, especially if we
see equity markets continue to stabilise. This will also benefit
cyclical and commodity currencies."
Data on Thursday showed Markit's Eurozone Flash Services
purchasing managers' index for manufacturing jumped to a 6-month
high of 36.7 in April from 33.9 in March, above the consensus
for 34.5, though it was still below the 50.0 mark dividing
growth from contraction.
Other data showed euro zone industrial new orders fell 0.6
percent in February, much smaller than forecasts for a 2.4
percent fall [].
U.S.-listed shares of Barclays Plc <BCS.N> <BARC.L> rose in
premarket trade on Thursday, rising 6.7 percent to $12.64 after
the British bank said its first-quarter financial performance
was well ahead of the same period last year. []
That followed news that Credit Suisse posted a net profit of
2 billion Swiss franc ($1.71 billion) for the first quarter,
twice as much as expected.
Meanwhile, the euro was flat against the Swiss franc, after
rising to a session high of 1.5198 franc after Swiss National
Bank Vice-Chairman Philipp Hildebrand repeated the central bank
will act resolutely to stem the Swiss franc's rise against the
euro as long as there are deflation risks.
But the rally lost steam as the SNB did not follow up the
talk with action, which some market players were anticipating as
they had set up long euro/Swiss franc positions.
The dollar up 0.3 percent at 98.30 yen <JPY=>.
Investors remain cautious about the results of the U.S.
government's "stress" tests on U.S. banks, while concerns linger
about the fate of troubled U.S. automakers.
The Wall Street Journal reported that U.S. banks will be
briefed by regulators as early as Friday on how they performed
in the tests before the results are made public later.
Some estimates of banks' likely losses that were used in the
stress tests were tougher than expected, the newspaper said.
[]
(Additional reporting by Jessica Mortimer; Editing by Victoria
Main)
