The pound trimmed its early losses against its major rivals in early European deals on Tuesday, as European stocks recovered after data showed that Eurozone business activity grew to 2-month high in December.

Flash survey data from Markit Economics showed that Eurozone composite output index advanced to 51.7 in December, the highest reading in two months, from 51.1 in November. Economists had forecast the PMI to come in at 51.5.

The flash services Purchasing Managers' Index rose to a 2-month high of 51.9, while the manufacturing PMI climbed to a 5-month high of 50.8.

The pound initially fell in response to a data showing slowdown in U.K. inflation in November, but has recouped losses shortly thereafter.

Data from the Office for National Statistics showed that U.K. inflation slowed to 1 percent in November from 1.3 percent in October. Economists had forecast prices to rise by 1.2 percent.

Another report from the same agency showed that factory gate prices continued to decline in November. Factory gate prices were down 0.1 percent, but slower than the 0.5 percent decrease in October and a 0.6 percent drop forecast by economists.

House prices growth in the United Kingdom quickened less than expected in October, separate data showed.

House prices grew 10.4 percent year-on-year in October following the 12.1 percent rise in the previous month. Economists had expected prices to advance 11.4 percent

After falling to a new 4-week low of 181.61 against the yen in early deals, the pound snapped back to 183.07. The pair was worth 184.20 when it ended yesterday's deals. The next possible resistance for the pound-yen pair is seen around the 186.00 zone.

The pound rebounded from an early near a 4-week low of 1.4997 against the franc with pair trading at 1.5086. Continuation of the pound's uptrend may lead it to a resistance around the 1.515 mark.

The pound, having fallen to near a 4-week low of 0.8005 against the euro earlier, bounced back to 0.7958. Next key resistance for the pound may be eyed around the 0.79 region.

The pound edged up to 1.5723 against the greenback, reversing from its recent decline of 1.5610. If the pound extends rise, 1.58 is seen as its next resistance level.

Looking ahead, U.S. building permits and housing starts, both for November, and Markit's flash U.S. manufacturing PMI for December are due to be released in the New York session.

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