Pound gains as survey shows house prices rising

LONDON (Reuters) - The pound rose broadly on Thursday, with the euro hitting a 3-1/2 week low against the currency, after data showed the first rise in house prices since October 2007.

Gains on equity markets -- helped as stronger-than-expected U.S. data offered a glimmer of hope for a recovery in the world's largest economy -- also boosted the pound, with the FTSE 100 index of top shares jumping by 3 percent.

Focus for the day ahead will be any developments at a summit of Group of 20 leaders in London and an interest rate decision by the European Central Bank.

A survey by Nationwide earlier on Thursday showed house prices unexpectedly rose 0.9 percent in March after falling by 1.9 percent in February, taking the annual rate of decline in prices down to 15.7 percent from 17.6 percent.

The news came hot on the heels of a survey on Wednesday showing manufacturing sector activity contracted less than expected last month, boosting hopes that recent substantial UK monetary easing is now feeding through into the wider economy.

"Sterling got a fresh boost from the Nationwide survey as it continues to benefit from more positive news out of the UK," Dublin-based AIB Group Treasury economist Geraldine Concagh said. "If services PMI data on Friday are also strong it would set sterling up for another lift ahead of the weekend."

At 7:58 a.m., the pound rose 0.6 percent against the dollar to $1.4539, while the euro fell 0.3 percent to 91.15 pence, close to a three-and-a-half week low of 91.07 pence hit not long after the Nationwide data.

The solid gains against the currencies of the UK's main trading partners pushed sterling up 0.7 points to 77.3 against a basket of currencies, its highest in over a week.

"The improvement in UK data provides a sterling-positive backdrop," which could move the pound towards $1.50 against the dollar, currency analysts at Bank of Scotland Treasury said in a note to clients.