* Euro rises vs broadly easing dlr as risk aversion cools
* European equities rise in early trade
* Global recession fears haunt, further deleveraging seen
* U.S. election eyed
(Adds quotes, update prices, changes dateline prvs
SINGAPORE)
By Tamawa Kadoya
LONDON, Nov 3 (Reuters) - The euro and other high-yielding
currencies such as sterling gained against the dollar on Monday,
while the yen retreated broadly as rising Asian and European
equities helped to dampen extreme risk aversion.
But as investors dipped their toes back into riskier assets,
gains were tempered by concerns about a possible prolonged
global recession, which kept overall support for the
low-yielding dollar and yen intact.
The pan-European FTSEurofirst 300 index <.FTSE3> was up 0.7
percent in early trade. Markets in Japan were closed for a
public holiday.
"The equity market seems to have stabilised and that is
feeding through to improved sentiment for risky assets on the
currency side," said Lee Hardman, currency economist at Bank of
Tokyo-Mitsubishi-UFJ. "But we may see more deleveraging, and
risk aversion will remain elevated given the risk of a prolonged
recession."
The euro and other high-yielding currencies tumbled last
month as investors fled riskier assets and were forced to shed
assets to raise funds, which were repatriated into the dollar
and yen. The euro saw its biggest monthly fall against the
dollar and yen since the common currency's inception in 1999.
At 0910 GMT, the euro was up 0.9 percent at $1.2844 <EUR=>
and up 1.7 percent at 127.59 yen <EURJPY=>.
Sterling rose around 1 percent against the dollar to $1.6288
<GBP=>, while the dollar was up 0.7 percent at 99.20 yen <JPY=>.
Traders said activity had been tame before major events this
week, including the U.S. presidential election on Tuesday
[]. A win by Democrat Barack Obama was generally
seen as more favourable for financial markets.
RATE CUTS IN SIGHT
The European Central Bank, the Bank of England and the
Reserve Bank of Australia are all expected to lower interest
rates to protect their struggling economies from the threat of a
looming global recession.
They are all seen easing by at least 50 basis points. Last
week the U.S. Federal Reserve cut its key rate by 50 basis
points to 1.0 percent and the Bank of Japan (BoJ) cut its rate
to 0.30 percent from 0.50 percent.
Emerging giants China and India also cut rates last week.
This week's data was seen underscoring economic weakness,
starting with euro zone manufacturing activity, which sank in
October below record low levels initially estimated.
The Markit Eurozone Purchasing Managers Index for the
manufacturing sector fell to 41.1 -- the lowest in the survey's
11-year history -- from September's 45.0, below the flash
estimate and economists' forecasts of 41.3.
The release marks the fifth consecutive month the PMI index
has been below the 50 mark that divides growth from contraction.
The U.S. Institute of Supply Management's factory activity
index, due out at 1500 GMT, is also expected to show further
weakness. Economists expect a reading of 41.5 versus 43.5 in
September.
(Reporting by Tamawa Kadoya; editing by David Stamp)
