Published: 05 Nov 2009 17:19:19 PST * Euro hits session highs versus dollar after Trichet * BoE ups QE by 25 bln sterling, low end of forecasts * U.S. new jobless claims fall to 10-month low (Adds quotes, updates prices, changes byline, changes dateline, previous LONDON) NEW YORK, Nov 5 - The euro traded well off its session lows against the dollar on Thursday after European Central Bank president Jean-Claude Trichet said the euro zone economy will recover next year. Trichet, speaking after the ECB kept interest rates at a record low 1.0 percent, said the latest evidence suggests a pick-up in activity in the second half of this year. He also said that extra liquidity measures would be withdrawn in a timely manner. For more Trichet comments, see [ID:nECBNEWS] "The comments sound slightly more optimistic on the growth outlook and confirm our view that the central bank is inching gradually closer to starting its exit strategy from the currently very expansionary policy," said currency strategists at Action Economics. The euro hit as high as $1.4917 , according to Reuters data, as Trichet spoke. It last traded at $1.4889, little changed on the day and above a session low of $1.4810. The euro was little changed at 134.91 yen . The dollar was down 0.1 percent at 90.62 yen , having pared losses after a report showed the number of U.S. workers filing new claims for jobless benefits fell more than expected last week to a 10-month low. For story, see [ID:nN0436092]. The pound jumped more than a full cent to hit a two-week high against the dollar after the UK central bank raised its asset buying but by less than some expected. Sterling was up 0.1 percent at $1.6574 after rising to $1.6637. The Bank of England expanded its asset-buying scheme by 25 billion pounds. [ID:nL5152809] Two-thirds of analysts had predicted the BoE would expand its asset-buying scheme, but opinion had been split on whether the increase would be 25 billion or 50 billion pounds. The BoE, which also left interest rates unchanged at a record low of 0.5 percent as expected, said the bond-buying would take another three months to complete and analysts said that would probably mark the end of the programme. "The Bank seems to be weaning the market off QE and we strongly suspect that -- barring any further negative surprises to economic growth -- this will be the last installment of the programme," said George Buckley, economist at Deutsche Bank. The central bank decisions in Europe come in the wake of that of the U.S. Federal Reserve, which on Wednesday kept its commitment to low borrowing costs for an "extended period", and held borrowing costs near zero as expected.

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