Aug. 19 (Bloomberg) -- The euro rose from near a one-week low against the pound on speculation a European report this week will show manufacturing and service industries contracted at a slower pace, adding to signs the recession in the 16-nation region is abating. Europe’s single currency gained versus 11 of its 16 major counterparts as economists said the Markit Economics’ composite index of both industries may be the highest in a year. The Dollar Index fell for a second day after Pacific Investment Management Co., which runs the world’s biggest bond fund, said the dollar will weaken as the U.S. pumps “massive” amounts of money into the economy. “There is a growing recognition that the economies around the world, including those in the euro-zone, are bottoming out,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “This is positive for the euro.” The euro gained 0.1 percent to 85.49 British pence at 2:01 p.m. in Tokyo from 85.37 yesterday in New York, when it reached 85.24 pence, the lowest since Aug. 10. Europe’s currency was at $1.4151 from $1.4136. The dollar fetched 94.67 yen from 94.69 yen yesterday. The U.S. currency traded at $1.6552 versus the pound from $1.6561, and was at 1.0750 Swiss francs from 1.0757 francs. slower pace, adding to signs the region’s recession is abating. Markit Economics will say its composite index rose to 48 in August from 47 in July, based on a Bloomberg survey of economists. That would be the highest since August 2008. The index is based on a survey of purchasing managers and due for release on Aug. 21. A reading below 50 indicates a contraction. ECB Rate Bets Investors increased bets the European Central Bank will maintain its benchmark rate at 1 percent by year-end. The implied yield on three-month Euribor futures contract for December delivery was 0.965 percent yesterday, from 0.940 percent on Aug. 17. The U.S. currency will drop the most against emerging- market counterparts, Curtis A. Mewbourne, a Pimco portfolio manager, wrote in a report on the company’s Web site. The greenback is losing its status as the world’s reserve currency, he said. “Investors should consider whether it makes sense to take advantage of any periods of U.S. dollar strength to diversify their currency exposure,” Mewbourne wrote in his August Emerging Markets Watch report. “The massive amounts of U.S. dollar liquidity produced in response to the crisis” have helped reduce demand for the currency, he wrote. The Dollar Index, which Intercontinental Exchange Inc. uses to track the dollar against the currencies of six major U.S. trading partners including the euro and yen, declined to 78.919 from 78.937 yesterday, after earlier touching 78.823, the lowest level this week. Japanese Exporters The yen reversed earlier declines against the dollar and the euro amid speculation Japanese exporters bought the currency. “There’s talk of keen yen-buying interest from exporters,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd. “This is likely to put currencies such as the dollar under downward pressure.” Japanese companies forecast the yen would average 94.85 per dollar in the 12 months to March 2010, according to the Bank of Japan’s quarterly Tankan survey released July 1.

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