By Mari Murayama and Kanako Chiba
Tokyo, June 3 (Bloomberg) -- The dollar rose for a second day against the euro on expectations a report due today will show U.S. manufacturing expanded in May for a fourth month, evidence an economic recovery may lure investors to U.S. assets.
The dollar traded at 93.18 U.S. cents per euro from 93.42 in late New York trading Friday. It last week dropped to a 15-month low against the euro. The currency bought 124.39 yen from 124.22. The currency market in London is closed today and tomorrow for public holidays.
``Good economic figures out of the U.S. may ease concern the nation's recovery will stall, helping the dollar,'' said Mitsuru Sahara, a vice president for foreign exchange at UFJ Bank Ltd. The dollar may rise to 126 yen by Friday, he said.
Manufacturing grew in May for a fourth month, the Institute for Supply Management is expected to report. That will follow reports Friday that showed orders placed with U.S. factories rose more in April than at any time since October, and manufacturing in the Chicago area expanded in May to the highest level in three years.
The dollar has fallen 6.7 percent against the euro and 6 percent versus the yen in the past three months on concern the U.S.'s rebound from a recession may be slower than investors expected.
That prospect has not changed and will weigh on the dollar, some traders said. A U.S. report Friday will show the unemployment rate rose to 6.1 percent in May from 6 percent in April. That may fuel concern a higher jobless rate will hurt consumer spending, which accounts for two-thirds of the nation's economy.
``Unless employment improves, consumer spending is unlikely to expand, and we cannot be optimistic about the U.S. economy and the dollar,'' said Katsunori Kitakura, a treasury department manager at Chuo Mitsui Trust and Banking Co.
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The yen may be helped by expectations a report on Friday will show the Japanese economy grew for the first time in four quarters, luring investors to the nation.
The Japanese government will probably report the nation's economy grew an annualized 6.8 percent in the January-to-March period, after shrinking 4.8 percent in the previous quarter, according to a Bloomberg News survey of economists.
``Good gross domestic product figures will heighten speculation more money will flow into Japan, helping the yen,'' said Takashi Toyahara, foreign exchange manager at Nomura Securities Co.
Overseas investors were net buyers of Japanese equities for a sixth week in the five days ended May 24, according to the latest Tokyo Stock Exchange figures.
Analysts are not too optimistic about the figures after Japan's Finance Minister Masajuro Shiokawa last week said the first-quarter GDP report will be ``tough.'' Shiokawa also said ``the number may provide some evidence for us to reconsider our assessment that the economy has bottomed.''
The economy will probably shrink 0.3 percent in the April- June period from the previous quarter, economists said.
Any rise in the yen may be limited by speculation the Japanese government will sell its currency for a fourth time in two weeks to curb its 7.5 percent climb against the dollar this quarter.
The Bank of Japan sold yen Friday on concern a stronger currency will erode the profits exporters earn on overseas sales, analysts said. The move failed to derail the yen's climb, which is being fueled by optimism the worst of a recession in the nation may be over.
In other trading, the dollar rose to 1.5725 Swiss francs from 1.5678 francs and little changed at $1.4555 per British pound from $1.4553 Friday.