LONDON: The euro rose on Wednesday against the dollar on the back of encouraging eurozone economic data on the eve of an interest rate decision from the European Central Bank.

In late morning trading here, the European single currency rose to 1.4067 dollars from 1.4032 dollars in New York late on Tuesday.

Against the Japanese currency, the dollar gained to 96.82 yen from 96.30 yen on Tuesday.

Manufacturing activity in the 16 countries using the euro hit a nine-month high in June, according to a survey published Wednesday.

The eurozone's purchasing managers' index (PMI) for the manufacturing sector, compiled by data and research group Markit, rose to 42.6 points from 40.7 points in May, slightly above an earlier estimate of 42.4.

The yen faced selling pressure after a smaller-than-expected improvement in Japanese business confidence.

The Bank of Japan said in its quarterly Tankan survey that business confidence among major Japanese manufacturers had improved for the first time in two-and-a-half years.

But many investors were disappointed because they had hoped for a better reading, dealers said.

"The market had thought the confidence index would go up a bit higher," said Masaki Fukui, senior market economist at Mizuho Corporate Bank. "The survey showed the business sentiment still remained cautious."

The sentiment index rose to minus 48 in June from a record low of minus 58 in March. Market forecasts had been for a figure of about minus 43.

Investors were meanwhile awaiting new leads from a ECB monetary policy meeting on Thursday and the release of US monthly employment data the same day.

The ECB is expected to keep interest rates at a record low of 1.0 percent despite an appeal from the Organisation for Economic Cooperation and Development to lower the main rate even further to nearly zero.

In trading here on Wednesday, the euro was changing hands at 1.4067 dollars against 1.4032 dollars late on Tuesday, 136.21 yen (135.17), 0.8565 pounds (0.8523) and 1.5244 Swiss francs (1.5244).

The dollar stood at 96.82 yen (96.30) and 1.0834 Swiss francs (1.0858).

The pound was at 1.6428 dollars (1.6459).

On the London Bullion Market, the price of gold eased to 931.70 dollars an ounce from 934.50 dollars an ounce late on Tuesday.