* Rebound in Chinese manufacturing drives risk appetite
* Yen hits 6-month low, Kiwi rises
* Euro steady ahead of new ECB chief testimony to parliament
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Dhara Ranasinghe
LONDON, Dec 2 (Reuters) - The Japanese yen fell to a
six-month low on Monday and the Australian and New Zealand
dollars rallied after an unexpected rebound in Chinese
manufacturing activity raised hopes of a brighter outlook for
the world economy.
The euro was steady ahead of a testimony to the European
parliament later in the day by the European Central Bank's new
president, Christine Lagarde. A tightening British election race
knocked the pound lower.
The latest data out of China, the world's second biggest
economy, set the tone for currency markets. Chinese factory
activity expanded at the quickest pace in almost three years in
November, a private business survey showed on Monday, following
upbeat official data over the weekend. The survey also showed total new orders and factory
production at buoyant levels.
"The fact that not only the Chinese PMI is better than
expected but the underlying numbers are also encouraging plays
into the narrative of other forward-looking numbers we've seen
globally," said Jeremy Stretch, head of G10 FX strategy at CIBC
capital markets.
"This gives reason for cautious optimism, even though we
wait to see what happens on phase 1 of the trade U.S./China
trade talks."
The safe-haven yen JPY=EBS fell to 109.73 per dollar, its
lowest since May and was last down a fifth of a percent at
109.63.
Riskier currencies also rallied after the Chinese data, with
the Australian dollar up a third of a percent at $0.6779
AUD=D3 .
New Zealand's currency, the Kiwi dollar, gained to a
one-month high at $0.6460 NZD=D3 . Analysts said the currency
was also buoyed by talk of fiscal stimulus to boost the New
Zealand economy.
Even a report by the news website Axios saying that tensions
in Hong Kong had stalled Sino-U.S. trade talk, was not enough to
hurt sentiment.
"S&P futures are up, there's a risk-on mood," said Jason
Wong, senior market strategist at BNZ in Wellington.
The next focus will be on manufacturing surveys in Europe
and the United States later in the day.
The euro EUR=EBS was steady at $1.1017 before Lagarde's
testimony to the European parliament later in the day.
Lagarde took over the helm of the ECB last month and
investors want a sense of the direction central bank policy will
take under its new president.
Elsewhere, sterling GBP=D3 was down a fifth of a
percentage point at $1.2919 as polls pointed to a narrowing lead
for the governing Conservative Party before the UK's Dec. 12
election.