US dollar fell for the third day versus the yen and lost ground against the euro as risk sentiment improved after a batch of manufacturing data from China and Germany allayed the market's worst fears about global growth.

Euro rallied after news that Greece's long delayed deal with private creditors to cut its debt burden was nearly wrapped up with Greek Finance Minister Venizelos saying that talks were "one formal step away".

Sterling climbed to a two-and-a-half month high against the dollar, supported by a surprise return to growth in the UK manufacturing sector. Outlook for the pound remained vulnerable as other recent data has shown the economy is on the brink of recession, raising expectations the Bank of England will step up its asset purchase programme next month.

Australian and New Zealand dollars were lifted by rising stocks and renewed optimism over Greek's deal as well as stronger manufacturing data in major economies.

Commodity markets:
Gold 1,750.63 /oz
Brent spot 112.77 /barrel