FOREX NEW YORK COMPANIES

-- Dollar and yen benefit as investors close positions ahead of U.S. jobs data

-- Sterling tumbles to 19 week low against dollar after poor U.K. data

-- South African rand falls to three-year low against dollar

By Alexandra Fletcher

Of DOW JONES NEWSWIRES

LONDON -(Dow Jones)- Demand for the dollar and yen continued to soar during European trading Friday as investors put on safe-haven currency bets ahead of key U.S jobs data and dumped sterling after weak U.K. manufacturing data.

The dollar index, which tracks the U.S. dollar against a basket of currencies, reached a 21-month high while the yen traded at its strongest level against the euro since December 2000 as investors sought better protection from possible contagion from the euro zone ahead of Greek elections June 17.

Investors also sold currencies deemed as risky or sensitive to global economic trends due to the approach of closely watched U.S. employment data at 1230 GMT, given a recent run of weaker economic reports from both the U.S. and China, analysts said.

"This morning has likely seen some position-squaring ahead of [U.S. nonfarm] payrolls which the market, as ever, is struggling to get a good handle on," said Daragh Maher, a foreign-exchange strategist at HSBC Holdings PLC in London.

According to a poll by Dow Jones Newswires, economists expect the data to show the U.S. economy created 155,000 new jobs in May, but so-called whisper numbers suggest that consensus figure could now be lower.

The pound sank to its lowest level against the dollar in more than 19 weeks after manufacturing data for May came in well short of expectations, suggesting the recession-hit U.K. economy is still contracting.

Sterling, which also hit a four-month low against the yen and lost ground against the unloved euro, slid to as low as $1.5269, precariously close to the July 2010 low of $1.5235, after the final manufacturing purchasing managers' index for the U.K. fell to 45.9 from 50.1 in April. Markets were expecting a 49.9 reading.

"The PMI print is a shocker, plain and simple. It points to a marked deceleration of activity, and this could well be a foretaste for a poor [economic growth] print for [the second quarter]," said Peter Kinsella, a currency strategist at Commerzbank AG in London.

He expects sterling to continue to tumble against the dollar and the yen in the near term.

Maher said the looming U.K. long weekend was an additional factor broadly moving markets as traders closed out positions, given London's prowess as the world's biggest foreign-exchange dealing market.

The euro hit a 23-month low against the dollar as the dollar gained across the board. Euro-zone manufacturing worsened further in May. The final manufacturing PMI for the 17-nation currency bloc fell to 45.1 in May from 45.9 in April, marking a near-three-year low.

The South African rand, which is particularly sensitive to swings in market sentiment, was the biggest loser in the emerging markets as it tumbled to the lowest level against the dollar since May 18 2009. The Polish zloty, Czech koruna, Hungarian forint and Turkish lira also extended their losses against the euro and the dollar after taking a hammering during most of May.

Looking ahead, Spain's government releases its estimates of the all-important regional budget deficits at 1200 GMT.

At 1055 GMT, the euro was trading at $1.2324 against the dollar, compared with $1.2366 late Thursday in New York, according to trading system EBS. The dollar was at Y78.19 against the yen, compared with Y78.30, while the euro was at Y96.37, compared with Y96.81. Meanwhile, the pound was trading at $1.5323 against the dollar, compared with $1.5404 late Thursday in New York. The ICE Dollar Index, which tracks the U.S. dollar against a basket of currencies, was at 83.314 from about 83.018.

A summary of key levels for chart-watching technical strategists is below:

 Forex spot:       EUR/USD    USD/JPY    GBP/USD    USD/CHF  Spot 1021 GMT     1.2319     78.11      1.5292     0.9747 3 Day Trend       Bearish    Bearish    Bearish    Bullish Weekly Trend      Bearish    Bearish    Bearish    Bullish 200 day ma        1.3266     79.69      1.5863     0.9151 3rd Resistance    1.2495     79.35      1.5526     0.9852 2nd Resistance    1.2456     78.71      1.5466     0.9784 1st Resistance    1.2366     78.51      1.5395     0.9776 Pivot*            1.2377     78.55      1.5430     0.9706 1st Support       1.2295     78.00      1.5272     0.9712 2nd Support       1.2151     77.88      1.5235     0.9666 3rd Support       1.2091     77.36      1.5126     0.9595   Forex spot:       EUR/GBP  Spot 1021 GMT     0.8055 3 Day Trend       Bullish Weekly Trend      Bearish 200 day ma        0.8361 3rd Resistance    0.8123 2nd Resistance    0.8101 1st Resistance    0.8079 Pivot*            0.9755 1st Support       0.8015 2nd Support       0.7972 3rd Support       0.7950  

-By Alexandra Fletcher, Dow Jones Newswires; +44 (0) 20 7842 9462; alexandra.fletcher@dowjones.com; @djfxtrader

(Dow Jones Technical Strategist Francis Bray contributed to this story.)

    (END) Dow Jones Newswires   06-01-120746ET   Copyright (c) 2012 Dow Jones & Company, Inc.