LONDON (AFX) - The euro was firm but off highs in midday London trade after positive readings on Euro zone's manufacturing sector purchasing managers' indexes, ahead of the US National Association of Purchasing Managers for November, due at 3.00 pm today, dealers said. They said the unit was well supported and predicted some seasonal support as portfolio flows and financial activity slow down over the holiday period. Ian Stannard, strategist at BBP Paribas, said that the "euro had bounce back on the back of demand from the crosses, namely euro/yen and euro/sterling." He added that the the market was expecting a little bit of a bounce back from today's firm European manufacturing sector purchasing managers' indexes. The Italian, French, German and Euro zone manufacturing sector PMI rose to a seasonally adjusted 44.5, 42.1, 43.9 and 42.9 in November from 43.3, 42.0, 42.0 and 42.9 in October respectively. Bucking the trend was the Dutch Nov PMI, which recorded an eight consecutive months decline to 42.5 in November from 42.7 in October. "We saw the euro/dollar test the trend line resistance at around the 0.8970 level this morning. We failed to rise above and we're now seeing the euro pull back a little bit," he added. The analyst saw further upside potential for the unit in the near term, particularly from support on the euro/yen cross. The yen came under renewed downward pressure overnight as Japanese investor sentiment took a knock from the Enron situation and foresees renewed interest into European investment. "The Japanese press over the weekend had a very pessimistic tone with regards to Enron and with Japanese investors taking a knock on the US investment, it may be that they start to focus on Europe once again," he added. Meanwhile sterling came under renewed pressure against the dollar following unsubstantiated reports of sterling negative mergers and acquisition activity over the weekend. Dealers said news of the UK Chartered Institute of Purchasing and Supply's manufacturing index falling to a three year low at 45.6 in November had no impact on the currency.