Jan 2 (Reuters) - The U.S. dollar index rose to a two-year high on the first trading day of 2025, while the euro and pound sank after disappointing purchasing manager reports.

The greenback was underpinned by data showing weekly jobless claims at an eight-month low and concerns about potential U.S. tariffs from incoming President Donald Trump.

The common currency slumped after PMI data showed euro zone manufacturing activity still contracting with the new orders index at a three-month low. But the euro’s drop may have been exaggerated due to thin markets and option-related sales near the 1.03 level.

The pound fell over 1% after a report that British factory activity shrank at the fastest pace in 11 months, raising questions about the Bank of England holding its policy rate steady.

The Australian dollar held a modest gain amid rising gold and natural gas prices.

Oil prices surged 2% after U.S. crude stocks fell, fueled partly by speculation about U.S. offshore drilling potentially being curbed. An earlier report that Saudi Arabia may raise crude prices for Asian buyers in February also buoyed prices.

Treasury yields fell 1 to 2 basis points. The 2s-10s curve was down about 1 basis point to +31.9bp.

The S&P 500 slid 0.80% as consumer discretionary stocks fell.

Gold rose 1.2% amid safe-haven demand while copper was little changed.

Heading toward the close: EUR/USD -0.94%, USD/JPY +0.32%, GBP/USD -1.25%, AUD/USD +0.10%, DXY +0.78%, EUR/JPY -0.57%, GBP/JPY -0.80%, AUD/JPY +0.48%.

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(Editing by Burton Frierson Reporting by Robert Fullem)

((robert.fullem@thomsonreuters.com;))