In times of recent market stress the franc has often moved in the opposite direction to stock markets as investors spooked by sputtering global growth pile into the Alpine currency.

Data from the Philadelphia Federal Reserve bank showing a sharp drop in US factory activity to the lowest level since March 2009 added to the slew of negative economic indicators, stoking fears the US economic recovery could stall.

"After yesterday's disappointing Philly Fed index the risk of a recession has really risen in the United States and this should strengthen the demand for safe-haven currencies," said Ursina Kubli, currency strategist at Sarasin.

The franc rose 0.6 percent against the euro compared to the New York close, trading at 1.1312 francs per euro at 0723 GMT. Against the dollar the franc rose 0.5 percent, trading at 0.7898.

Friday's moves underscored how sensitive the franc is to the wider global economy raising questions about how effective the Swiss National Bank's liquidity boosting measures will be at taming the currency in the long-term.

The Swiss National Bank said on Wednesday it would expand sight deposits to 200 billion Swiss francs ($252 billion), its third round of easing measures in as many weeks.

Rates on short-dated fixed income products, such as the euro-Swiss futures have already turned negative. The three-month Swiss franc LIBOR, the market rate the SNB targets, has also fallen to historic lows.

"In the last days we have seen a large impact from the measures on interest rates -- they have turned negative on the short end of the curve and that should make the Swiss franc less attractive for foreigners," Kubli said.

"In the current environment with recessionary risk really rising, it's likely the SNB will need further measure to fight the strong Swiss franc," she said.

Copyright Reuters, 2011