LONDON: The euro firmed against the dollar on Friday after the US economy returned to growth in the third quarter, helping boost investor readiness to take on more risk, dealers said.

In late morning London deals, the European single currency edged up to 1.4843 dollars from 1.4833 dollars late on Thursday.

Against the Japanese currency, the dollar fell to 90.98 yen from 91.42 yen late on Thursday in New York.

The dollar stumbled against the euro on Thursday after government data showed the US economy escaping from recession, increasing demand for riskier assets such as the European currency.

"Markets took heart from all this positive US data and as risk aversion abated, equity and commodity prices responded positively and the dollar got sold," said CurrenciesDirect analyst Mark O'Sullivan.

US economic output grew at a seasonally-adjusted 3.5 percent annual rate in the July-September period, the strongest growth in two years.

That restored confidence in a US and global economic recovery as investors switched funds into commodities from the "safe haven" yen and dollar, NAB Capital strategist John Kyriakopoulos said.

The dollar had gained in recent days on worries about whether a recovery in the US economy was sustainable.

On Friday, the US unit also lost ground due to selling by Japanese exporters, dealers said.

"Regional share markets are doing well today, prompting markets to sell the yen and the dollar" against riskier currencies that pay higher interest, said Osao Iizuka, forex trading head at Sumitomo Trust and Banking.

Tokyo's benchmark Nikkei-225 index finished 1.45 percent higher on Friday.

Investors gave a muted response to data showing Japan's unemployment rate fell to a four-month low of 5.3 percent in September and a Bank of Japan statement that it would end some of its emergency stimulus measures at the end of the year while maintaining its key interest rate at 0.1 percent.

The BoJ also said Japan's economy faces three years of deflation with consumer prices set to keep falling until at least the financial year to March 2012.

In London on Friday, the euro was changing hands at 1.4843 dollars against 1.4833 dollars late on Thursday, at 134.36 yen (135.64), 0.8970 pounds (0.8954) and 1.5101 Swiss francs (1.5108).

The dollar stood at 90.98 yen (91.42) and 1.0178 Swiss francs (1.0183).

The pound was at 1.6540 dollars (1.6561).

On the London Bullion Market, the price of gold rose to 1,044.50 dollars an ounce from 1,040.50 dollars an ounce late on Thursday.