* U.S. mid-Atlantic manufacturing up, jobless claims rise
* Shanghai stock index jumps 4.5 pct
* Traders cautious in holiday-thinned markets (Adjusts first paragraph, updates prices)
By Steven C. Johnson
NEW YORK, Aug 20 (Reuters) - The dollar was treading water against the euro and yen on Thursday in thin trade as economic data added to uncertainty about the U.S. and global outlook.
A report from the Philadelphia Federal Reserve showed regional factory activity advanced while a rebound in Chinese stocks also lifted spirits. But an increase in the number of U.S. workers filing first-time jobless claims last week kept investors cautious and capped euro gains against the dollar.
Over the last year, the low-yielding dollar and yen have tended to fall when markets grow more optimistic and as investors buy higher-yielding assets and currencies.
That relationship has started to weaken, though, and analysts said investors appear unwilling to extend already large positions against the U.S. currency.
"We'll have a recovery but it's going to take a while to gain traction," said Meg Browne, senior currency strategist at Brown Brothers Harriman in New York. "U.S. interest rates will stay low for a while yet, and so now you're seeing a lot of positioning because there's not a lot to trade on."
The dollar was up 0.1 percent at 94.13 yen after hovering in a tight 93.86 to 94.55 range. The euro was little changed at $1.4230, off a $1.4256 session peak, and at 134.00 yen.
Sterling was down 0.3 percent at $1.6479 after weak data on British public finances underscored concern about the country's fiscal situation.
The Norwegian crown rose, hitting its highest level against the euro since March, after data showed Norway's non-oil economy grew 0.3 percent from April to June. Last week, Norges Bank, the country's central bank, hinted it may hike interest rates in early 2010.
The rise in U.S. jobless claims did add to concerns that the strongest U.S. data has so far come from manufacturing, which accounts for only a small slice of the U.S. economy.
"For a real recovery, we need the consumer to be in the game, but with rising unemployment, the consumer is not going to be out there spending," said Kurt Karl, chief U.S. economist at Swiss Re in New York.
He said the jobless claims report "is indicative that this is definitely not going to be a V-shaped recovery."
U.S. and European stocks rose, following a 4.5 percent surge in the Shanghai Composite Index, which shed nearly the same amount the previous day.
Market participants have been focusing on the Shanghai index, which in the two weeks to Wednesday had shed nearly 20 percent, rattling confidence in a global recovery.
"It is an understandable reaction as Chinese equities have acted as a good leading indicator for broader market dynamics over the past year," Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ, wrote in a research note to clients.
But he said perceptions that China's economic recovery is essential to global recovery may be overdone, adding that world stock gains owe more to the flood of money central banks have pumped into their economies than from China's outlook. (Additional reporting by Vivianne Rodrigues in New York and Naomi Tajitsu in London; Editing by James Dalgleish)