* Dollar whacked by trade tensions and weak U.S. data
* Aussie extends rebound after RBA keeps rates on hold
* Sterling buoyed by latest poll on Conservative lead
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, Dec 3 (Reuters) - The euro and Japanese yen on
Tuesday largely held gains made against the dollar this week
after disappointing manufacturing data and signs of new fronts
in U.S. President Donald Trump's trade war rattled greenback
investors.
Moves in currency markets were broadly contained, however,
with volatility remaining low and investors not appearing to
take much fright at news of U.S. tariffs on imports of metals
from Argentina and Brazil and the threat of more tariffs on a
range of European goods. "As long as there is no game changer in the trade
conflict...the market considers Trump twitters of this nature to
be just background noise that can simply be ignored,"
Commerzbank analysts said in a note.
"Nonetheless uncertainty has no doubt risen again as to what
will happen in mid-December now that everything seems possible
again between the two opponents," they added, referring to a
deadline when the U.S. is set to apply more tariffs on Chinese
imports.
The euro has recovered from a three-week low against the
dollar of $1.0981 on Friday, moving as high as $1.1091
EUR=EBS . On Tuesday it was flat on the day at $1.1076.
The yen also held most of its gains, a reversal from a
six-month low plumbed before Trump's tariff announcements. The
dollar last traded at 109.08 yen JPY=EBS , down from Monday's
109.73.
Of more concern for the dollar's fortunes may be Monday's
weak manufacturing reading for the U.S. economy, analysts said.
The U.S. Institute for Supply Management said its index of
national factory activity fell 0.2 points to a below-forecast
48.1 in November. Separate data showed construction spending
fell in October as investment in private projects tumbled.
The readings surprised economists who had recently raised
U.S. growth forecasts for the fourth quarter.
"The weak data forced a lot of people to give up dollar
longs and cut losses," said Daiwa Securities' foreign exchange
strategist Yukio Ishizuki in Tokyo.
"This may have run its course, but there's no reason to
chase the dollar's upside from here. Trade friction remains a
lingering threat, which is not good for market sentiment."
The Australian dollar, which is very sensitive to the global
growth outlook given its large export dependence on China, hit a
three-week high after the Reserve Bank of Australia's decision
to keep interest rates on hold.
The Aussie surged on Monday on better-than-expected economic
survey data in China. The currency was last up 0.3 percent at
$0.6841 AUD=D3 , while the New Zealand dollar also made solid
gains NZD=D3 .
Sterling rallied 0.2 percent against the dollar GBP=D3 and
the euro EURGBP=D3 as the latest poll showed an increase in
the Conservative Party's lead over the opposition Labour Party.