LONDON, Aug 30: The dollar firmed versus major currencies, helped by a stronger-than-expected rise in a US purchasing managers index for August, dealers said.

The single European currency eased to 0.9805 dollars against 0.9847 on Thursday evening in New York.

The dollar rose to 118.74 yen from 118.14 on Thursday.

The Chicago purchasing managers index rose to 54.9 points in August compared to 51.5 in July, outpacing economists’ forecasts for a 52.2 rise.

BNP Paribas analyst Ian Stannard said: “There had been fears that the PMI data would come in much weaker given the latest run of US negative survey, particularly with consumer indices giving a negative picture”.

Steve Pearson, head of strategy at HBOS Treasury financial said the PMI data brought signs that stuttering US confidence is beginning to smooth out.

“There is a very good correlation between the Chicago PMI and the manufacturing ISM figure, and the figure rekindled hope for better US data next week,” said Pearson, referring to a widely watched Institute for Supply Management.

“The Chicago PMI numbers are tilting the balance towards improved US manufacturing ISM numbers next week,” he explained.

CIBC World Markets economist Audrey Childe-Freeman agreed: “The data brings hope that conditions within the manufacturing sector have improved during August.”

“US stocks as well as the dollar are benefiting”, she added.

But BNP Paribas’ Stannard said that although the dollar had recovered a little bit of ground following the Chicago PMI, there remained doubts about the sustainability of the unit’s recovery.

He explained that downward pressure would remain on the US currency as risk aversion emerged.

“Risk aversion has started to pick up again, particularly in the light of the Bush administration’s tough line over Iraq,” he said.

The euro, as well as sterling and the Swiss franc all look set to benefit from increased risk aversion, he said.

Elsewhere sterling held firm after Britain’s leading home-loan lenders reported another strong rise in house prices.

The Nationwide Building Society reported earlier that house prices surged 2.5 per cent in August from the previous month.

Nationwide’s house price figures showed that year-on-year rises in August were the fastest since 1989.

Separately, British consumer credit rose further in July, oupacing economists’ expectations.

The euro was changing hands at 0.9805 dollars against 0.9847 late on Thursday in New York, 116.46 yen (116.32), 0.6337 pounds (0.6356) and 1.4722 Swiss francs (1.4712).

The dollar was being quoted at 118.74 yen (118.14) and 1.5010 Swiss francs (1.4933).

The pound was at 1.5476 dollars (1.5490), 183.75 yen (183.05) and 2.3232 Swiss francs (2.3127).

On the London Bullion Market, an ounce of gold pushed up to $312.80 from $312.10 late on Thursday.—AFP