LONDON (AFX) - The euro weakened in early trade on expectations that today's US figures will show an upturn in the world's biggest economy and boost the dollar further, dealers said. "People have come back from yesterday's public holiday in the US optimistic that the National Association of Purchasing Managers' index will paint a positive picture of the US economy," Halifax economist Steven Pearson said. "As well, the rise in US equities on Hewlett-Packard's merger with Compaq has boosted the dollar against the euro," he said. Pearson said that if the NAPM index is higher than 44, as some market participants are hoping, the euro will suffer. WestLB's Michael Klawitter noted that while the euro is labouring under the strength of the dollar, it is also lower against sterling and the yen. "Apart from the ongoing weak economic fundamentals, the sharp drop in the euro zone's major stock indices down to the lowest levels in two years also undermines the confidence in the euro," he said. Klawitter predicted further euro selling today. In the UK, sterling gained against the euro after yesterday's poor manufacturing figures raised hopes of another interest rate cut before the end of the year. Elsewhere, the yen weakened against the dollar but dealers said it will continue to lack clear direction ahead of Friday's second quarter to June GDP data.