* Dollar at 3-1/2 month low vs major currencies
* MSCI World up as PMIs point to global expansion
* U.S. stock futures firm before nonfarm payrolls
* Growth optimism lifts gold, copper, Brent oil
By Richard Hubbard
LONDON, Feb 1 (Reuters) - The dollar fell and world stocks
gained on Friday as fresh economic data signalled that the euro
zone's downturn has eased and China's growth was on track, but
moves were limited as investors await a U.S. jobs report.
American employers are expected to have added 160,000 new
jobs to their payrolls in January, a marginal rise on December's
155,000 gain, and a stronger number could knock the safe-haven
dollar further as it would signal a strengthening recovery.
U.S. stock index futures pointed to a higher open on Wall
Street on Friday, reflecting the hopes for jobs growth,
while the dollar languished at a 3-1/2 month low against a
basket of currencies.
MSCI's world equity index added 0.5 percent
to stay close to its best level since May 2011.
Earlier, shares moved higher across Europe when euro zone
factories recorded their best month in nearly a year during
January although remaining mired in recession, according to the
Markit Purchasing Managers' Index (PMI).
"Providing there are no further setbacks to the region's
debt crisis, these data add to the expectation that the euro
zone is on course to return to growth by mid-2013," said Chris
Williamson, chief economist at data compiler Markit.
The euro hit a high of $1.3657 after the data came
out, its highest level since November 2011, before settling to
show a gain of 0.5 percent at $1.3643.
The common currency also hit a 33-month high against the
yen, rising more than 1 percent to 125.96 yen.
The pan-European FTSEurofirst 300 index extended
its recent gains by 0.2 percent to 1,166.67 points, near a
23-month high after solid rally since the start of the year.
London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX were up between 0.5 and 0.8 percent.
Earlier, China's official PMI for January eased to 50.4, but
held above the 50 mark which separates expansion from
contraction, while a separate private survey showed growth in
the manufacturing sector had hit a two-year high, underlining
hopes the nation's economic recovery is slowly gaining momentum.
The mixed reading left MSCI's broadest index of Asia-Pacific
shares outside Japan little changed.
A report from the Institute for Supply Management, due out
at 1500 GMT, is likely to show that American factories joined in
the modest global expansion in January.
Both the euro and European stocks trimmed some of their
gains when the European Central Bank said the region's banks
would return only 3.5 billion euros ($4.75 billion) of its
emergency 3-year loans in a second repayment window next week.
The banks, which borrowed over one trillion euros of the
cheap money at the height of the euro zone crisis, have another
two years to pay it back if they want but took the opportunity
this week to return a surprisingly large amount of the loans.
The quicker-than-expected repayments have triggered a rise
in money market interest rates, effectively
tightening monetary conditions, and rates could keep climbing if
the money continues to drain from the system.
For Europe's struggling countries and the ECB this is not an
ideal situation, effectively tightening monetary policy and
creating unwanted stress just as economies are showing fragile
signs of improvement.
It also comes as the Federal Reserve is undertaking a
massive monetary stimulus in the United States and the Bank of
Japan has come under strong pressure from the new government in
Tokyo to add liquidity to boost its economy.
"The perception is that the ECB is being less supportive and
is not providing as much liquidity as the other central banks
are," said Andrew Milligan, head of Global Strategy at Standard
The approach of the U.S. jobs report was limiting moves in
commodity markets which were generally supported by the rising
confidence in the outlook for global growth.
Gold was up 0.2 percent at $1,665.91 an ounce, silver was up
0.1 percent at $31.43 an ounce and three month copper on
the London Metal Exchange rose to $8,199 a tonne, up 0.4 percent
Iron ore, which is particularly sensitive to economic
growth, climbed to its highest level in more than two weeks to
around $152.50 a tonne .
"The impression is that things are improving slowly on the
macroeconomic front. The data seems to be moving in the right
direction and we have had more positive surprises than negative
surprises," said Robin Bhar, a metals analyst at Societe
In the oil market the rising economic optimism coupled with
tension across the Middle East, the world's biggest oil
producing region, has put Brent crude on track to its
biggest weekly gain in two months, while U.S. crude is set to
rise for an eighth straight week.
Brent oil was up 33 cents to $115.88, although U.S.
crude futures slipped 27 cents to $97.22 a barrel.