* Euro lifted away from 28-month lows
* Dollar weakness helps emerging market currencies
* Sterling gains on bid to stop no-deal Brexit
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, Sept 4 (Reuters) - The dollar extended its fall on
Wednesday following disappointing manufacturing data, helping
the euro to recover from more than two-year lows.
Sterling also rallied, recovering some of Tuesday's losses
after the latest parliamentary attempt to stop a no-deal Brexit.
The dollar's pullback was prompted by manufacturing activity
in the world's biggest economy contracting for the first time in
three years last month, data from the Institute for Supply
Management published on Tuesday showed. That knocked the wind out of a previously rising greenback
and spurred a further bond rally as investors increased bets on
more Federal Reserve interest rate cuts before the end of 2019.
The dollar was last down 0.2% against a basket of major
currencies, its index at 98.803 .DXY , easing from a more than
two-year high hit on Tuesday.
"Yesterday's manufacturing survey was very gloomy and
confirms that the U.S. is suffering from the global trade and
manufacturing downturn, along with everyone else," said Kit
Juckes, currency strategist at Societe Generale (PA:SOGN).
The euro rose 0.2% to $1.0992 EUR=EBS , pulling further
away from $1.0926 - a 28-month low - touched on Tuesday before
the weak U.S. data was published.
The European single currency was little moved by the final
release of the euro zone Purchasing Managers Index composite
survey, which came in slightly better than expected.
The safe-haven yen and Swiss franc fell as some calm
returned to markets, helped by reports that Hong Kong leader
Carrie Lam would on Wednesday announce the formal withdrawal of
an extradition bill that triggered months of unrest. Data showing growth in China's service sector also boosted
investor sentiment.
The yen was down 0.2% at 106.19 yen per dollar JPY=EBS .
The Swiss franc dropped 0.3% versus the euro to 1.0858 francs
EURCHF=EBS .
The dollar's weakness helped China's offshore yuan CNH=EBS
pull away further from record lows plumbed earlier this week.
The yuan was last up 0.3% at 7.1553 yuan per dollar.
Emerging market currencies were mostly up on the dollar
weakness, while the Australian and New Zealand dollars also
seized on the greenback's weakness to rise AUD=D3 NZD=D3 .
"The expectation that the Fed will come to the rescue has
increased," said Rodrigo Catril, senior FX strategist at
National Australia Bank in Sydney.
"But it's not a capitulation on the dollar. It's just merely
stopped the recent rise of the dollar."
The British pound, which on Tuesday fell below $1.20 and to
its weakest in three-years, rose 0.5% to the day's high of
$1.2157 GBP=D3 .
Against the euro it rallied 0.4% to 90.39 pence EURGBP=D3 .
Lawmakers who defeated Prime Minister Boris Johnson's
government late on Tuesday are expected to introduce a bill in
parliament seeking to stop Britain from leaving the European
Union on Oct. 31 without transitional arrangements.