* U.S. Mid-Atlantic manufacturing up, jobless claims rise
* Traders cautious in holiday-thinned markets
* Canada dollar jumps on Goldman Sachs recommendation
* Shanghai stock index jumps 4.5 percent (Adds quote, details, updates prices, changes byline)
By Wanfeng Zhou
NEW YORK, Aug 20 (Reuters) - The dollar and yen edged lower on Thursday in thin trade as gains in global stock markets and upbeat U.S. regional manufacturing data eroded safe-haven demand for the two currencies.
A report showed manufacturing in the U.S. Mid-Atlantic region expanded in August for the first time in 10 months while a rebound in China stocks also lifted spirits. But an increase in the number of U.S. workers filing first-time jobless claims last week kept investors cautious.
Over the past 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, though some analysts say that relationship has started to weaken.
"We'll have a recovery but it is 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 is not a lot to trade on."
In afternoon trading in New York, the euro rose 0.1 percent to $1.4250, near a $1.4256 session peak, and was up 0.2 percent at at 134.10 yen.
The dollar was little changed at 94.09 yen after hovering in a tight 93.83 to 94.55 range.
U.S. and European stocks rose, following a 4.5 percent surge in the Shanghai Composite Index, which shed about the same amount the previous day.
Sterling was down 0.2 percent at $1.6498 after weak data on British public finances underscored concern about the country's fiscal situation.
The rise in U.S. jobless claims did add to concerns that the strongest 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 also said the jobless claims report "is indicative that this is definitely not going to be a V-shaped recovery."
One of the bigger movers was the Canadian dollar, which rose to its highest level in about a week after Goldman Sachs recommended buying the currency against the U.S. dollar.
The firm said U.S. fundamentals "will not improve sufficiently this year," and therefore "genuine and broad dollar strength will 'not yet' materialize. The Canadian dollar looks "particularly attractive given its strong exposure to oil," Goldman wrote in a research note.
In other trading, the Norwegian crown hit 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.