Tokyo - The dollar rose in early Asian trade on Tuesday after suffering a sell-off in New York in response to unexpectedly weak US manufacturing data that raised concerns about the economy.

The greenback bought 101.22 yen, up from 100.94 yen late in New York, but well down from 102.31 yen in Tokyo earlier on Monday.

The euro was mixed at $1.3518 and 136.86 yen, from $1.3529 and 136.58 yen in US trade.

US currency markets were jolted after the Institute for Supply Management's purchasing managers index (PMI) sank to 51.3 in January from 56.5 in December. A figure above 50 indicates growth and anything below points to contraction.

The latest figures throw the focus on US employment figures due this week as investors look to gauge the state of the economy as the Federal Reserve winds down its stimulus, citing a firming recovery.

The Fed announcement rattled emerging markets such as India, South Africa and Russia on fears of a capital flight, which in turn sent their currencies diving.

Poor China data has also dampened investors' spirits, dealers said.

“Investors should steer clear of risk assets over the short term as the turmoil does not look like it will be over anytime soon,” Credit Agricole said.

The dollar has suffered selling pressure after hitting a five-year high above 105 yen earlier this year.

“I don't think the (dollar/yen) trend is downward for this year, but the 105 yen level looks far off now,” Sumitomo Mitsui Banking Corp foreign-exchange trading head Masaru Ishibashi told Dow Jones Newswires.

Improving Japanese inflation figures have supported the yen by reducing speculation of more easing measures from the Bank of Japan ahead of an April tax rise, which many fear will dent consumer spending.

The Japanese data, published on Friday, showed consumer prices up 0.4 percent last year, the first annual rise since 2008, suggesting Tokyo was winning its battle against deflation.

Traders have also been moving back into the euro after it suffered a sell-off last week in response to weak eurozone data that fuelled speculation of an interest rate cut by the European Central Bank. - AFP